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TALAYINSIGHT
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HighIV Macro Policy & Sovereign Debt23 September 2026, Wednesday

US Treasury sells $70 billion of 5-year notes at 5.033%; after hot PMIs the 10-year yield hits 5.10%, its highest since 2007

On 23 September 2026 the US Treasury sold 70 billion dollars of 5-year notes at a yield of 5.033%, the highest auction yield since before 2006. The same day S&P Global's flash composite PMI rose to 58.4, and the 10-year yield climbed 13 basis points to 5.10%, with the 30-year at 5.39%.

Location: WASHINGTON

According to investinglive and TFTC, the 70-billion-dollar 5-year auction on 23 September closed at 5.033%; with the when-issued yield at 5.002% before the auction, this produced a 3.1 basis point tail. The six-auction average was 0.6 basis points; TFTC recorded the tail as the second largest ever at this maturity. The bid-to-cover ratio fell to 2.21 (one-year average 2.33; previous auction 2.371), and indirect participation, representing foreign central banks and institutions, dropped to 54.31% (average 65.2%, previous auction 61.51%). Primary dealers took 15.77% of the auction, about 11 billion dollars (average 12.9%). The previous auction on 26 August had cleared at 4.393%, a difference of 64 basis points. Wolf Street put the size of the same auction at 80 billion dollars; the two figures conflict.

The data that triggered the yield spike was S&P Global's flash PMI: according to PYMNTS, the composite index rose from 56.0 in August to 58.4 in September, the fastest expansion since July 2021, with services at 58.7 and manufacturing at 57.0. According to the S&P Global assessment cited by Wolf Street, input costs rose at the steepest pace in four years and supply bottlenecks reached the most severe level in the survey's roughly 20-year history. According to Wolf Street data, on 23 September the 10-year yield rose 13 basis points to 5.10% (the highest since June 2007), the 2-year 13 basis points to 4.90%, the 5-year 18 basis points to 5.03% and the 30-year 9 basis points to 5.39% (the highest since July 2004).

This auction followed the 2-year auction on 22 September at 4.787%; the next test in the series is the 7-year auction on 24 September. By TFTC's calculation, the rise in yields increases the annual interest cost of this single issue by about 448 million dollars. According to Wolf Street, the Treasury also announced a nominal 6-billion-dollar buyback of 20–30-year bonds. The result of the 7-year auction could not be verified at the time of writing.

Talay assessment

Bottom line

Read together, the weak 5-year auction and the 58.4 PMI show the market pricing further Fed tightening and heavy supply with a higher term premium. The fall in indirect demand to 54.31% points to foreign buyers pulling back. The most likely path is for yields to remain volatile around 5%, with tail risk persisting at subsequent auctions.

Likely effects

  • US borrowing costsNegative1–6 months

    The 64 basis point month-on-month rise at the 5-year auction adds about 448 million dollars a year to interest costs on a single issue; higher refinancing costs widen the budget deficit.

  • Global yieldsNegativeWeeks

    The rise in the US 10-year yield to 5.10% pushes up the yield floor for European and emerging-market bonds.

  • Türkiye's financingNegative1–6 months

    US yields at their highest since 2007 raise the cost of dollar-denominated borrowing for the Treasury and companies, and make capital flows into lira assets harder.

Possibilities, ranked

  1. 1
    Yields stay above 5%55%

    Hot data and weak auction demand keep the 10-year yield above 5% for weeks.

    Watch: The tail and indirect participation rate at the 24 September 7-year auction

  2. 2
    Partial retreat30%

    Once Treasury buybacks and the Fed's October signal become clearer, the 10-year yield falls back below 5%.

    Watch: Treasury 20–30-year buyback operations and pricing of an October hike

  3. 3
    Disorderly sell-off15%

    Foreign demand weakens further, the 30-year yield rises above its 2004 peak as well and market functioning is impaired.

    Watch: Indirect participation falling below 54.31% at subsequent auctions

Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.

Market reaction

Indicators affected

Historical context

US 10-year yield, last 6 months

4.174.444.725.005.2724/0329/0405/0614/0719/0825/0917 September 2026 — Fed dot plot median for 2026 rises to 4.00-4.25% while the 10-year yield eases from 5.04% to 4.94%121 September 2026 — The Fed's Goolsbee: if inflation is coming from demand, the rate response will be sharper and front-loaded223 September 2026 — US Treasury sells $70 billion of 5-year notes at 5.033%; after hot PMIs the 10-year yield hits 5.10%, its highest since 2007324 September 2026 — India's Sensex falls 1,247.71 points to 73,580; rupee presses against the 96 threshold as Brent tops $102 and the US 10-year yield exceeds 5.11%424 September 2026 — US Treasury sells 44 billion dollars of 7-year notes at 5.085%: highest yield since April 1993 as indirect demand falls to 57.2%524 September 2026 — No joint statement at Xi–Trump summit: tariff truce extended by just 2 months from 10 November to 10 January, no new decisions on chips or rare earths625 September 2026 — Michigan consumer sentiment at a 4-month low of 48.1, 1-year inflation expectations jump to 4.6%; US 30-year yield rises to 5.50%7
  1. 117/09 · Fed dot plot median for 2026 rises to 4.00-4.25% while the 10-year yield eases from 5.04% to 4.94%
  2. 221/09 · The Fed's Goolsbee: if inflation is coming from demand, the rate response will be sharper and front-loaded
  3. 323/09 · US Treasury sells $70 billion of 5-year notes at 5.033%; after hot PMIs the 10-year yield hits 5.10%, its highest since 2007
  4. 424/09 · India's Sensex falls 1,247.71 points to 73,580; rupee presses against the 96 threshold as Brent tops $102 and the US 10-year yield exceeds 5.11%
  5. 524/09 · US Treasury sells 44 billion dollars of 7-year notes at 5.085%: highest yield since April 1993 as indirect demand falls to 57.2%
  6. 624/09 · No joint statement at Xi–Trump summit: tariff truce extended by just 2 months from 10 November to 10 January, no new decisions on chips or rare earths
  7. 725/09 · Michigan consumer sentiment at a 4-month low of 48.1, 1-year inflation expectations jump to 4.6%; US 30-year yield rises to 5.50%

Sources

  1. investinglive — US treasury sells $70 billion of 5 year notes at a high yield of 5.033%
  2. TFTC — 5-Year Treasury Auction Yields 5.033%, 2nd Biggest Tail Ever
  3. Wolf Street — Bond Bloodbath: 10-Year Treasury Yield Spikes 13 Basis Points to 5.10% after Hot PMIs
  4. PYMNTS — S&P Global Data Shows Fastest US Business Growth Since Post-COVID Reopening