US Treasury Auctions $139 Billion; 2-Year Yield 4.315% (2.66x), 5-Year 4.408% (Tail, 2.28x)
The US Treasury auctioned $139 billion in 2-year and 5-year notes on July 27, 2026. The 2-year note yielded 4.315%, the highest since December 2024, with a bid-to-cover ratio of 2.662, strong indirect and direct bidding, and dealers taking only 9.4%. The 5-year note yielded 4.408%, also the highest since December 2024, but demand was weak, with a bid-to-cover of 2.282, the lowest since September 2022, and foreign demand at 59.24%, the lowest since July 2025. Dealers were forced to take 13.5%.
The US Treasury conducted the first two auctions of the week on July 27, 2026, issuing a combined $139 billion in notes. The $69 billion 2-year note auction at 11:30 a. m. yielded 4.315%, up from 4.189% at the previous auction and the highest since December 2024. The bid-to-cover ratio was 2.662, the highest since January 2026. Indirect bidders took 56.6% of the allocation, above the previous 55.5% but below the recent average of 58.2%; direct bidders took 34.1%, roughly flat from 34.3% a month earlier; dealers received only 9.4%, the lowest since January 2026.
Subsequently, the $70 billion 5-year note auction performed poorly. The bond yielded 4.408%, sharply higher than June's 4.20% and also the highest since December 2024. The bid-to-cover ratio fell to 2.282, the lowest in nearly five years (since September 2022). Foreign demand accounted for only 59.24%, the lowest since July 2025; direct bidders took 27.22%, the highest since January 2026; dealers were forced to hold 13.5%, the highest since March 2025. The two auctions, held within 90 minutes, showed a clear divergence: strong demand for the 2-year note, while the 5-year note was one of the worst auctions in recent years.