The U.S. Treasury plans to auction $22 billion in 30-year bonds. This is the last of three bond auctions this week, following strong interest in the 3-year and 10-year note auctions.

Metrics Overview

We will evaluate the auction results against the average metrics from the past six months. The tail is at 0.0 basis points, and the bid-to-cover ratio is 2.37 times. Direct bids, which show domestic interest, are at 24.9%. Indirect bids, reflecting international interest, average 60.9% over the last six months. Dealer participation usually makes up 14.1% of the auction. Given the strong demand seen in earlier auctions this week, we are closely watching today’s 30-year bond sale for signs of ongoing strength. A successful auction, especially with high international bids (above the 61% average), might suggest that the recent rise in long-term yields is ending. This could be a signal to reduce short positions in Treasury futures. On the other hand, a weak result—like a “tail” greater than one basis point or a bid-to-cover ratio below 2.3x—might show declining interest in long-duration assets. This could lead to higher yields, prompting us to consider puts on long-bond ETFs or shorting Ultra T-Bond futures (/UB). This is especially relevant after last week’s August 2025 CPI data showed a slight increase at 3.4%, keeping inflation worries alive.

Foreign Appetite and Market Volatility

The indirect bid will be a key focus, as it indicates foreign interest in U.S. debt and influences the dollar. Strong foreign demand, a trend seen in most of 2025, could lift the U.S. Dollar Index, which is currently around 105. Conversely, weak demand might allow us opportunities in currency derivatives, betting against the dollar in the short term. Volatility is another point to consider, with the bond market’s MOVE index slightly above 100, which is historically high. An unexpected auction result could lead to increased volatility across various asset classes. We might explore simple options strategies, like buying straddles on the SPY, to prepare for significant market movements in either direction. This level of attention to auctions is reminiscent of late 2023, when each piece of data on debt demand could shift Federal Reserve expectations. Although the Fed has maintained its position for several quarters, any signs of instability in the Treasury market could affect their future approach. Hence, we are also keeping an eye on derivatives tied to the Fed funds rate for changes in sentiment. Create your live VT Markets account and start trading now.

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