The Treasury Building in Washington at night, with the statue of Albert Gallatin in the foreground, photographed in January 2023 · APK, via Wikimedia Commons · CC BY-SA 4.0

Article · 2026-09-23 · 7 min read · Government bonds and rates · World and macro

A weak auction sends the five-year yield past 5 percent

Treasury's own results sheet shows the 70 billion dollar sale awarded at 5.033 percent with the dealers left holding more than the day before; the morning's business survey was the strongest in five years and Governor Barr said further hikes are likely; oil came back above 100 dollars on Iran's words, and a diesel export ban rose and fell within the day, as the sources report it.

By the desk. Researched and written by an AI model from the sources listed at the end; nothing here restates another publication's text.

LENadjacent KBHadjacent DHIadjacent PHMadjacent TOLadjacent RKTadjacent UWMCadjacent JPMadjacent BACadjacent WFCadjacent USBadjacent AGNCadjacent NLYadjacent VLOadjacent MPCadjacent PBFadjacent PSXadjacent

The auction, from Treasury's own sheet

At one o'clock on Wednesday 23 September the Treasury sold 70 billion dollars of five-year notes and had to pay 5.033 percent to place them, the high yield on its results sheet, on a note that carries a 5 percent coupon and matures on 30 September 2031. Bidders offered 154.9 billion dollars for the 70 billion on sale, a bid-to-cover ratio of 2.21; the median accepted yield was 4.950 percent, and 30.34 percent of the bids at the high yield were filled. Of the competitive awards, 37.8 billion dollars went to indirect bidders, the group that includes foreign central banks bidding through dealers, 20.8 billion to direct bidders and 11.0 billion to the primary dealers, the banks obliged to bid at every auction, who had tendered 85.9 billion and were left with 15.8 percent of the paper. The Federal Reserve's own account took a further 10.5 billion dollars outside the competition. ^[2]

The day before, the two-year note had gone better: 69 billion dollars at a high yield of 4.787 percent with a bid-to-cover of 2.63, and the dealers left with 8.9 billion of the 67.7 billion awarded competitively, by Treasury's auction data. Investing.com reported the five-year's 5.033 percent as the highest yield at a five-year auction since 2006 and above the yield the market had priced before the sale, and Reuters reported five-year yields crossing 5 percent for the first time since 2007 in the trading that followed. ^{[3, 10, 9]}

The curve at the close, as Treasury draws it

Treasury's daily par yield curve, the official record of the day, puts the two-year at 4.85 percent, the five-year at 4.99, the ten-year at 5.11 and the thirty-year at 5.40 at the end of 23 September, against 4.71, 4.83, 4.96 and 5.29 the day before: a rise of 11 to 16 basis points along the curve in one session. The five-year's 5 percent was therefore a level touched during the day and not the day's close; Investing.com put the five-year at 5.03 percent during the session and the ten-year at 5.118, and Reuters the thirty-year at 5.411. The ten-year's 5.11 at the close is its highest since 2007, Yahoo Finance reported; the desk's study of 17 September had marked the first closes above 5 percent since 2023. ^{[1, 10, 9, 11]}

Why the buyers asked for more

Three documents landed before the auction. At 9:45 in the morning S&P Global published its flash purchasing managers' survey for September, taken from 10 to 22 September: a composite output index of 58.4 against 56.0 in August, the fastest expansion since July 2021 and a fourth month of acceleration; services at 58.7 and manufacturing at 57.0; jobs added at a pace not seen for over four years; backlogs of work rising at the sharpest rate since May 2022; and input costs jumping at the steepest rate for four years on the spike in energy prices. Chris Williamson, its chief business economist, wrote that the data pointed to annualized growth of around 5 percent and that the rising backlogs showed companies developing more pricing power, 'a worry for the inflation outlook'. ^[5]

The same morning Governor Michael Barr of the Federal Reserve told a housing conference at the Chicago Fed that the committee's quarter-point increase last week, which he supported, was an adjustment in the right direction because 'we were out of position', that 'risks to achieving our inflation target have increased, while risks to the labor market have receded', and that in his base case 'further policy adjustments are likely to be needed to ensure inflation comes down to target'. He named tariffs, the conflict in the Middle East, Russia's war on Ukraine and 'a surge in investment demand to support the artificial intelligence buildout' among the pressures on prices. The committee had raised its target range to 3.75 to 4 percent on 16 September by twelve votes to none, and sixteen of its eighteen participants placed the rate above that range at the end of the year in their projections; by Wednesday evening futures priced a nearly 70 percent chance of another increase in October, up from 50 percent a week earlier, Reuters reported from the CME's FedWatch tool. ^{[4, 8, 6, 7, 9]}

And oil came back. Brent settled 3.9 percent higher at 103.08 dollars a barrel and West Texas Intermediate 1.8 percent higher at 92.16, Investing.com reported, ending five days of declines, after Iran's president, Masoud Pezeshkian, told the General Assembly that 'yes they did hit us, but we did not bend the knee' and that Iran was ready for negotiations 'without accepting the language of force', Euronews reported. Bloomberg had reported on Tuesday, citing people familiar with the matter, that Saudi Arabia was building pressure on its restarted East-West pipeline and aiming for a meaningful restart of flows by 26 September, with exports resuming later in the week and tankers already arriving at Yanbu; Aramco and the oil ministry did not respond to its requests for comment. ^{[13, 14, 15]}

What it did to stocks, mortgages and the diesel ban

The Dow ended 0.7 percent lower, the S&P 500 0.8 percent and the Nasdaq 1.1 percent, Yahoo Finance reported. Austan Goolsbee of the Chicago Fed said he did not know whether markets would react differently to a lengthier period of 5 percent yields than they had in the past, Reuters reported, in a piece quoting strategists on whether the number that matters is 5 or 6; Mike Bell of BlueBay told it that people think of a magic number for Treasury yields 'but it's a relative number, not an absolute number'. ^{[11, 12]}

The mortgage moved first. The Mortgage Bankers Association's 30-year conforming rate rose to 7.12 percent in the week to 18 September from 6.97, its highest since May 2024, and applications fell 1.5 percent with adjustable-rate loans taking 9.8 percent of the total, HousingWire reported from the survey; Freddie Mac's weekly average stood at 6.95 percent on 17 September. Barr's speech that morning was about the cost of shelter: high prices and high rates, he said, put homeownership out of reach for many families, and estimates put the housing shortfall at roughly 2 million to 5.5 million units. Lennar said on 16 September that its market had deteriorated since its last call as mortgage rates rose, and KB Home said on 22 September that conditions had weakened since June, each in its own results release on EDGAR. ^{[20, 21, 4, 22, 23]}

The refiners had their own day. On Tuesday, at the United Nations, Trump had said 'I've said let's not send out the diesel. We make a lot of diesel', and Treasury Secretary Scott Bessent said the administration was examining whether a full or partial ban would work, Quartz reported; the American Petroleum Institute's president, Mike Sommers, warned that restricting exports would end up hurting consumers, and AAA's diesel average stood at 6.53 dollars a gallon on Wednesday, about 3 dollars above a year earlier. On Wednesday, after Politico reported a plan for a 90-day ban, Marathon Petroleum's shares were down 1.2 percent, Valero's 2.1 percent and PBF's 2.0 percent, and American diesel futures 6.3 percent, Investing.com reported; then a White House official told Reuters the report was 'fake news', and by the evening Fox News reported the administration had backed away from the idea. ^{[16, 17, 18, 19]}

Who it reaches

Every path is adjacent, because an auction names no company. Lennar, KB Home, D.R. Horton, PulteGroup and Toll Brothers sell houses to buyers borrowing at the rates the Mortgage Bankers Association reports, and the first two said this month that their markets had weakened as those rates rose. Rocket and UWM write the mortgages. JPMorgan, Bank of America, Wells Fargo and U.S. Bancorp hold Treasuries and mortgages whose value moves with the curve Treasury publishes, as do AGNC and Annaly, which own mortgage bonds. Valero, Marathon Petroleum, PBF and Phillips 66 refine the diesel the export debate is about. Each company's file on this site carries its record. ^{[20, 22, 23, 1, 17, 16]}

Sources

Every stock is a company; the desk grades the company behind the stock. This article describes; it does not recommend. Adjacent means the company is not named in the event and the path by which it is reached is stated above.

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