The US Treasury plans to sell $125 billion in bonds across three auctions this week. Demand at Monday’s $58 billion three-year note sale fell short of recent averages, putting Tuesday’s $42 billion 10-year auction in focus as October inflation data is released. Together, the results could shape expectations for long-term yields and influence the appeal of non-interest-bearing assets such as bitcoin.
Three-year auction draws below-average demand
The three-year notes sold Monday carried a yield of 4.627%, with a bid-to-cover ratio of 2.53, below the typical level of about 2.64. Indirect bidders, including overseas buyers, took 55.5% of the offering, compared with an average of 62.7%.
The figures point to relatively limited demand for the notes. If buyers require higher returns, the Treasury may have to offer bonds at higher yields. One auction does not determine the direction of the market, but its results provide a gauge of investor appetite for government debt.
Inflation report coincides with 10-year sale
The US government is scheduled to release its October inflation report at 8:30 a.m. ET on Tuesday. The $42 billion 10-year Treasury auction is due to conclude at 1 p.m. Economists expect prices to have risen about 0.3% month over month. The inflation reading could shift expectations for the Federal Reserve’s rate path and affect demand and pricing for the 10-year notes.
Some economists have already anticipated another Fed rate hike on December 9. If the inflation data or auction demand leads investors to seek higher yields, longer-term borrowing costs could come under pressure. The 10-year yield is a benchmark for the government’s borrowing costs and also helps set US mortgage rates and inform stock valuations.
Why yields matter to bitcoin
Bitcoin pays no interest. When Treasury yields rise, holding bitcoin means forgoing the interest income available from bonds, which may change how some investors weigh the two assets. Bond yields also influence broader financial conditions, making Tuesday’s inflation report and auction relevant to crypto markets.
The available figures show that Monday’s auction metrics were below average and that Tuesday’s inflation release and bond sale are scheduled for the same day. They do not establish how bitcoin prices will respond. The week’s Treasury issuance, actual demand for the 10-year notes and the inflation reading will give markets more information to assess yields and risk assets.