Hello Traders tomorrow we have 10-Year Note Auction data and I wanted to prepare a nice little information for you about this topic because the data released last month showed an immediate 10% increase and from what I saw, many people had no idea what was happening.
What is the 10-Year Note Auction?
The U.S. government regularly issues 10-year Treasury notes to finance its budget. The auction result reflects investor demand and long-term interest rate expectations. The yield (interest rate) that results from the auction is a key benchmark for financial markets globally.
Connection to U.S. Stocks and EUR/USD
🟢 If Demand Is Strong (Yields Stay Low):
- Investors are eager to buy U.S. debt, pushing prices up and yields down.
- This indicates confidence in the U.S. economy and little concern about inflation or rate hikes.
- Stock markets generally react positively.
If Demand Is Weak (Yields Rise):
- Investors require higher returns, possibly due to inflation fears or policy tightening expectations.
- This pushes yields up, increasing borrowing costs and reducing the attractiveness of risk assets.
- Stocks typically decline, and the dollar strengthens.
Effect on EUR/USD
🟢 If Yields Rise:
- U.S. dollar becomes more attractive due to higher returns.
- Investors buy USD to invest in Treasuries.
- EUR/USD typically falls.
If Yields Fall:
- Lower yields reduce the appeal of the dollar.
- Investors may move capital elsewhere.
- EUR/USD tends to rise.
️ Latest 10-Year Treasury Auction – April 9, 2025
- Auction Size: $39 billion
- High Yield: 4.435%
- Expected (WI) Yield: 4.465%
- Outcome: Strong demand – yield came in lower than expected.
Post-Auction Market Reactions
10Y Treasury Yield:
- Before auction: ~4.466%
- After auction: Dropped to ~4.38%
- Reflects strong investor demand and confidence in long-term stability.
S&P 500 Index:
- Lower yields reduce borrowing costs and support equity valuations.
- Investors often shift toward riskier assets like stocks when yields fall.
- The S&P 500 responded positively after the auction.
EUR/USD:
- Falling yields reduce the dollar’s relative appeal.
- This may push EUR/USD higher, depending on other macroeconomic influences (like ECB policy or geopolitical risks).
Conclusion
The April 9, 2025, 10-year Treasury auction showed strong demand with a yield lower than market expectations. This led to a drop in yields, a positive reaction in U.S. stock markets, and potential downward pressure on the dollar, which may support EUR/USD.