Bid-to-Cover Ratio
Total bids received at a Treasury auction divided by the amount sold — a key gauge of demand strength for government debt.
Formula
Bid-to-Cover = Total Bids Submitted / Amount Offered
The bid-to-cover ratio measures auction demand: a ratio of 2.5 means investors bid $2.50 for every $1.00 of bonds issued. A high ratio signals strong demand; a low ratio signals weak demand and potential difficulty funding government debt at current rates.
Historical averages vary by tenor — 10-year T-Note auctions typically see bid-to-cover ratios of 2.3–2.8. A materially lower reading (e.g., 2.1) triggers yield spikes as the market recalibrates the clearing price for Treasuries.
Weak demand at Treasury auctions — especially when combined with large issuance calendars — is a catalyst for bear steepening: yields rise at the long end as the market prices in higher supply risk and reduced foreign and institutional demand.
Related Terms
Treasury Auction
The regular process by which the U.S. government sells new Treasury securities to investors via competitive and non-competitive bidding.
IntermediateTreasury Security
Debt issued by the U.S. federal government through the Treasury Department — the benchmark risk-free asset in global finance.
Beginner