Foreign Buyers Still Love U.S. Debt—But Don’t Let That Fool You

A “Strong” Auction Masks the Real Story Another U.S. Treasury auction came and went this week, and at first glance, everything looks just fine. In fact, the latest 7-year auction was the best of the bunch—stopping at a 4.022% yield, the lowest we’ve seen since last fall. That’s a win for the Fed and the Treasury, especially with foreign buyers (called “Indirects” in auction speak) soaking up 76.7% of the offering—the most since last December. Domestic Confidence is Slipping But don’t let that lull you into thinking the dollar is safe and sound. Yes, foreign central banks are still showing up at these auctions, but we have to read between the lines. The bid-to-cover ratio—a key gauge of demand—was the…