HighIV Macro Policy & Sovereign Debt24 September 2026, Thursday

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%

The 24 September 7-year auction closed at 5.085%, the highest yield since 1993; a 0.7 basis point tail and a bid-to-cover ratio of 2.42 pointed to weak demand. The same day the 10-year yield rose to 5.18% and the 30-year to 5.47%; CME data put the probability of an October hike at 77.5%.

Location: WASHINGTON

According to a Dow Jones report published on MarketScreener, the US Treasury sold roughly 44 billion dollars of 7-year notes at a yield of 5.085% on 24 September, the highest auction yield since April 1993. The pre-auction market yield was 5.078%, while the bid-to-cover ratio fell from 2.50 at the August auction to 2.42. According to investingLive's breakdown, the tail was 0.7 basis points (average 0.2), the indirect bidders' share 57.2% (average 64.6%), the direct bidders' share 30.27% (average 23.3%) and the dealers' share 12.53%. The auction came immediately after the weak 70 billion dollar 5-year sale on 23 September, which cleared at 5.033%.

According to the US Treasury's daily yield curve data, the 10-year yield rose from 5.11% on 23 September to 5.18% on 24 September, the 30-year from 5.40% to 5.47% and the 2-year from 4.85% to 4.87%; the 20-year tenor climbed to 5.53%. According to a CNBC report on 24 September, New York Fed President Williams said it was reasonable to expect one more hike by the end of the year; CME FedWatch lifted the probability of an October hike from around 53% on 23 September to 77.5% on 24 September. The Fed had raised its policy rate by 25 basis points on 16 September to a range of 3.75–4.00%. Another source gave the probability for the same day as 69.7%; this discrepancy could not be verified.

Talay assessment

Bottom line

Two weak auctions in a row show that pricing in extended-maturity US borrowing is now set by rate expectations rather than foreign demand. With an October hike priced above 70% and indirect demand 7 points below average, the likelihood of the 10-year yield staying above 5% is rising. The most likely path is for yields to remain elevated and volatile.

Likely effects

Global borrowing costsNegative1–6 months
The rise in the US 10-year yield to 5.18% is acting as the anchor of a global sell-off that is also pushing up extended-maturity yields in Europe and Japan; the interest burden on public budgets is increasing.
Türkiye external financingNegativeWeeks
The rise in the US 10-year yield to 5.18% and the 7-year auction yield to 5.085% raises the cost of Türkiye's eurobond and syndicated loan rollovers and limits portfolio inflows to emerging markets.
Fed policyUncertainWeeks
Williams finding a year-end hike reasonable and the October probability climbing to 77.5% make the 28 October meeting a live decision point.

Possibilities, ranked

1
Volatile equilibrium at high yields55%
The 10-year yield stays within a 5–5.3% band; auctions clear fully but with tails, and the Fed hikes by 25 basis points in October.
Watch: Indirect bidding share and tails at the October 10- and 30-year auctions
2
Sell-off deepens30%
If energy prices and hot data persist, the 10-year yield breaks above 5.3% and the term premium at the far end of the curve rises quickly.
Watch: A 30-year yield close above 5.5%
3
Return to safe haven15%
If a deal on the Strait of Hormuz or a growth shock arrives, oil falls, demand for Treasuries returns and yields drop below 5%.
Watch: Brent falling below 95 dollars and the FedWatch October probability dropping below 50%

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

Market reaction

Indicators affected

US 10-year yield▲ +7 bp (5.18%)
US 30-year yield▲ +7 bp (5.47%)
7-year auction yield▲ 5.085%
Indirect bidding▼ 57.2% (avg. 64.6%)

Historical context