By Karishma Vanjani

Wall Street is watching the auction of 10-year Treasury notes on Wednesday afternoon to gauge the market's demand for long-duration, safe-haven assets, a day after a disappointing sale of 3-year notes.

The war in the Middle East, and its impact on a volatile stock market, would seem to provide the conditions for investors to run to Treasuries, a longtime haven. But investors have run the other way, largely over fear that oil prices will stoke inflation, and that has led to a selloff in Treasuries since the Feb. 28 U.S.-Israeli strikes on Iran.

It's against this backdrop that the Treasury Department will be auctioning $39 billion worth of 10-year debt. If demand underwhelms, it will signal that investors don't see a relative value case to buy U.S. debt despite geopolitical uncertainties.

The setup doesn't look good. On Tuesday, the Treasury saw poor demand for its 3-year debt as the government offered an additional 0.012 percentage points in yields or premium to sell its debt. When an auction clears at a higher yield, it signals weak demand.

From an auction trend perspective, since 2022, 70% of 10-year auctions have seen weak demand when they have been preceded by a 3-year auction that saw at least 0.01% in higher yield than expected, wrote Ian Lyngen, head of U.S. rate strategy at BMO Capital Markets.

Moreover, a wave of new corporate supply has hit the market, including a new debt from Amazon, that may pull investor dollars away from the 10-year auction.

A weak 10-year auction is sure to pull down values. And because prices and yields move in opposite directions, yields would go up. On Tuesday, 10-year yield closed at 4.14%, right around its 50-day moving average of 4.15%. When yields break past moving averages, it is a sign that a downtrend or uptrend is likely to continue.

Treasury yields have declined 0.04 percentage points since the last auction, according to J.P. Morgan.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com.

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March 11, 2026 11:41 ET (15:41 GMT)

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