Treasury Sells $24B In 10-Year Notes At Lowest Rate Since 2017

The U.S. Treasury completed auctions for $24 billion in 10-year notes Wednesday. With the spread between two-year and 10-year Treasuries at its lowest point since the financial crisis in 2008, investors were playing close attention.

What Happened

The Treasury offered $24 billion in 10-year notes originally issued on Feb. 15, 2019 and maturing on Feb. 15, 2029.

The median rate on the notes was 2.425 percent, down from the median rate of 2.585 percent during the Treasury’s last 10-year auction roughly a month ago and the lowest rate seen at a 10-year Treasury auction since December 2017.

Why It’s Important

Stock market investors have been watching the bond market closely for any signs of economic trouble on the horizon. Strangely enough, the bond market and the stock market have been giving investors mixed signals so far this year.

Typically, falling bond yields and falling stock prices are indicators of fears about slowing economic growth.

Last month, the Federal Reserve reiterated its plan to be patient on further rate hikes after getting some mixed data on the strength of the global economy, particularly in Europe and China.

The Fed lowered its economic growth forecast from 2.3 percent to 2.1 percent. It also said 2019 inflation rates will average 1.8 percent, down from 1.9 percent and below its 2-percent target. Finally, the new estimated unemployment rate is 3.7 percent, up from 3.5 percent in December.

According to CME Group, the bond market is pricing in a 44.4-percent chance the Fed’s target rate range of 2.25 percent to 2.5 percent will remain in place through the end of the year.

The bond market is pricing in a 55.6-percent chance of at least one interest rate cut sometime in 2019.

What’s Next

U.S. Treasury yields fell across the board Wednesday after the European Central Bank voted to hold rates steady. Investors will now turn their attention to the Federal Reserve March meeting minutes, which are due to be released Thursday afternoon at 2 p.m. ET.

Related Links:

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Fed Says No Rate Hikes In 2019; Trump Warns China Tariffs Could Stand For A 'Substantial Period Of Time'

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