The 30-year U.S. Treasury auction sees weak demand: Overseas interest plunges, forcing dealers to step in.

The latest US 30-year Treasury auction performed weakly, with overseas demand plummeting and dealers forced to act as the last buyers, forming a sharp contrast with the strong performance of the 10-year Treasury auction the previous day.

On June 11, the latest auction data showed that this reopening auction of $22 billion in 30-year Treasuries was priced at a maximum yield of 5.02%, slightly lower than last month’s 5.046%, but 1.2 basis points higher than the yield in the secondary market, marking the third consecutive tail in the 30-year auction, and the largest tail spread since August 2025.

The bid ratio by indirect bidders dropped sharply to 59.95%, the lowest since August 2025, while dealers’ passive uptake ratio rose to 14.74%, reaching a near one-year high.

This auction result drew market attention. The evident retreat of overseas demand, coupled with increased dealer backstopping, raised doubts about the demand outlook for US long-end Treasuries. For the US bond market, which relies on external funds to support fiscal spending, the signal is not to be ignored.

Auction Details: Tail Spread Widens, Demand Structure Deteriorates

From specific data, all indices of this auction show weak demand.

The bid-to-cover ratio was 2.328, slightly higher than last month's 2.303, which was already the lowest this year, but still far below the recent average of 2.43. Overall demand has not substantially improved.

The deterioration in demand structure is even more pronounced. The proportion of indirect bidders, representing overseas and institutional investors, plunged to 59.95% from last month's 66.6%, a drop of more than 6 percentage points, hitting the lowest since August 2025.

Meanwhile, direct bidders' participation rose to 25.31%, higher than the six-auction average of 23.7%, filling part of the gap to some extent.

However, after a sharp retreat in indirect demand, dealers were finally forced to take up 14.74% of the share, the highest since July 2025, acting as the "last buyer".

This is in stark contrast to the performance of the 10-year Treasury auction the previous day. According to reports, the proportion of indirect bidders in the 10-year auction reached the fifth highest on record, showing strong overseas demand. The stark difference between the two auctions left a deep impression on the market.

There are two main interpretations for the lackluster auction.

First, the Producer Price Index (PPI) data released on the auction day was strong, heightening inflation expectations and suppressing investors' willingness to allocate to long-duration fixed income assets, making 30-year Treasuries less attractive.

Second, some believe that funds are flowing into private assets such as SpaceX, thus incremental funds available for US Treasuries have lessened, indirectly weakening auction demand.

It is worth noting that last month's 30-year Treasury auction set a record for a 5% coupon rate for the first time; the yield this time dropped slightly to 5.02%, but the continued appearance of tail spreads shows that at the current rate level, demand for ultra-long US Treasuries remains far from solid.

Risk Disclosure and DisclaimerThe market entails risks, and investments should be made cautiously. This article does not constitute individual investment advice, nor does it take into account the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Investments made accordingly are at their own responsibility.