Treasury auctions: the bond market event that sneaks into FX

[Shadow Trader]

When the US Treasury sells ten-year or thirty-year bonds, the results come out shortly after 1pm New York time. If demand is weak, yields can jump, and the dollar often responds.

Traders look at a few details: the tail, which is the gap between the average yield and the when-issued level; the bid-to-cover ratio; and the share taken by indirect bidders, a proxy for foreign demand.

A long tail or poor demand signals trouble absorbing supply. A sharp rise in yields after such an auction can ripple into USDJPY and gold within minutes.

The effect is not huge on a typical day. But when concerns about deficits or inflation are high, auctions get more attention and produce larger reactions.

For scalpers, the key is awareness. A calendar that includes the Treasury auction schedule explains moves that otherwise seem to come from nowhere.

Which auctions have produced the largest reactions in your pairs, and do you keep them on your calendar?