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.
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.