The US Treasury conducted an auction of 20-year bonds on September 15, 2026, offering $13 billion in debt. The auction cleared at a yield of 5.420%, marking the highest level since the program was reintroduced in May 2020. This figure represents a notable increase from the 5.204% yield recorded in August.
Foreign demand, tracked by the allocation to indirect bidders, dropped to a record low of 52.5%. This is a significant decline from the 62.9% share seen just one month prior. The auction resulted in a tail of 2.0 basis points against the when-issued level, representing the widest gap observed since 2024.
The bid-to-cover ratio reached 2.57, which is higher than the 2.53 recorded in August but remains below the recent average of 2.65. Domestic interest partially offset the decline in foreign participation, with direct bidders securing a record 30.7% allocation. Primary dealers were left with 16.9% of the total offering.
Market analysts noted that other auctions held during the same week performed better, suggesting that the challenges faced by the 20-year bond are specific to this maturity. The yield increase of over 20 basis points within a single month contributes to tighter financial conditions, independent of Federal Reserve policy rate adjustments.
