The US Treasury 10-Year Bond Sale performed worse than expected ahead of tomorrow’s CPI number release. The auction garnered a D- rating across the fixed Interest desk with weak demand from the international market and a tail 2.7 bps the biggest since April. The auction followed an earlier $41 billion 3-yr note auction, which also met weak demand. Today’s backtracking lifted the 30-yr yield to a fresh high for the year, closing +6 bps at 3.51%.
The bid to cover 2.37X vs. six-month average of 2.45X, indirect takedown 62.3 percent vs. the six-month average of 67.0%. The desk gave a D- rating on the auction.
Auction Highlights
- Duration: 10 Years
- Amount: $32 billion
- High yield: 3.330%
- When-Issued level at the time of the auction 3.303%
- Tail 2.7 basis points vs. six month averageof 1.2 bps
- bid to cover 2.37X vs. six-month average of 2.45X
- Dealers 19.8%vs. the six-month average of 15.3%
- Directs 17.9% vs. the six-month average of 17.7%
- Indirects 62.3 percent vs. the six-month average of 67.0%
Auction grade: D–
Yields after the auction
- 2-yr: -1 bp to 3.56%
- 3-yr: -2 bps to 3.60%
- 5-yr: +1 bp to 3.46%
- 10-yr: +4 bps to 3.36%
- 30-yr: +6 bps to 3.51%
Average results of previous 12 auctions: High yield: 3.330%
- High yield: 3.330% (2.153%).
- Bid-to-cover: 2.37 (2.48).
- Indirect bid: 62.3% (68.9%).
- Direct bid: 17.9% (17.1%).
Prior auction results:
- High yield: 2.755%
- Bid-to-cover: 2.53
- Indirect bid: 74.5%
- Direct bid: 15.6%
- Directs a measure of domestic demand
- Indirects a measure of international demand
- Dealers take the balance
Live From the Pit
From The TradersCommunity US News Desk