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10-Year Treasury Auction: Foreign Buyers Shrug-Off Debt Ceiling Concerns

The U.S. Treasury sold $38 billion in 10-year notes Wednesday at a high auction yield of 1.338% as foreign buyers shrugged off the looming threat of default linked to the reinstatement of the nation's debt ceiling. 

Investors bid $2.59 for every $1 on offer from the Treasury, auction data showed, modestly lower than the 2.65 'bid-to-cover' ration recorded at the last auction on August 11, when the yield was 1.340%, and the recent average of 2.43. 

Foreign buyers, the data indicated, took down just over 71.1% of the sale -- one of the highest levels on record -- suggesting the specter of lawmakers failing to lift the nation's $29 trillion debt ceiling later this month holds little sway in a market comprised of $16 trillion worth of fixed income assets trading with a negative yield.

Benchmark 10-year note yields bumped modestly higher, to 1.341% in the immediate wake of the auction, while stocks were little-changed with the Dow Jones Industrial Average marked 117 points lower on the session and the S&P 500 falling 13 points.

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The U.S. reinstated its debt ceiling on August 1, forcing the Treasury to use "extraordinary measures" to ensure maturing debt is refinanced without adding extra borrowing onto the national ledger.

Treasury Secretary Janet Yellen told lawmakers Wednesday that her office is "not able to provide a specific estimate of how long the extraordinary measures will last."

"However, based on our best and most recent information, the most likely outcome is that cash and extraordinary measures will be exhausted during the month of October," he said.