The US Treasury 30-Year Bond Sale of $21 billion which met weaker demand than sales of 3- and 10-yr notes over the past two days. The high yield was 3.106% vs 3.095% WI with a long tail of 1.1 bps. The report followed US Producer price inflation for July falling in much the same way as July consumer inflation released the day before. For the month PPI fell 0.5% (exp +0.3%) after the 1.1% increase in June. U.S. Treasuries ended Thursday with sharp losses in most tenors, the 30-yr yield back above its 50-day moving average (3.142%) to a three-week high. The Fixed Interest desk rated it a C+ after yesterday’s A on the 10-year auction.
The bid-to-cover ratio of 2.31x was below average 2.33x, indirect takedown was 70.6% vs 66.6% average. The desk gave an C rating on the auction. Today’s buying after the weaker than expected inflation report for July suggests the bond market is already looking past inflation-related headlines to an expected deceleration in growth.
Auction Highlights
- Duration: 30 Years
- Amount: $21 billion
- High yield 3.106%
- WI level at time of auction 3.095%
- Tail -1.1 basis points
- Bid-Cover Ratio: 2.31X vs six-month average of 2.33X
- Direct Accepted: 18.5% vs six-month average of 17.6%
- Indirect Accepted: 70.6% vs. six-month average of 66.6
- Dealers vs six-month average of 15.8%
Auction grade: C
Yields after the auction
- 2-yr: UNCH at 3.19%
- 3-yr: +3 bps to 3.17%
- 5-yr: +7 bps to 2.99%
- 10-yr: +10 bps to 2.89%
- 30-yr: +13 bps to 3.17%
Prior auction results:
- High yield: 3.115%
- Bid-to-cover: 2.44
- Indirect bid: 73.2%
- Direct bid: 16.3%
Yields ahead of the auction
- 2-yr: -5 bps to 3.14%
- 3-yr: -4 bps to 3.10%
- 5-yr: -3 bps to 2.89%
- 10-yr: +1 bp to 2.79%
- 30-yr: +4 bps to 3.08%
Average results of previous 12 auctions: High yield: 2.499%
- High yield: 2.499%
- Bid-to-cover: 2.36
- Indirect bid: 67.7%
- Direct bid: 17.1%
Live From the Pit
From The TradersCommunity US News Desk