The US Treasury 10-Year Bond Sale performed worse than expected ahead of a likely hot May CPI number released later in the week, garnering a D- rating across the Fixed Interest desk with weak demand from the international market. The tail was -1.2 basis points with WI level at time of the auction 3.018% and the high yield of 3.03% at the auction. Soft demand after yesterday’s $45 billion 3-yr note sale. The post-auction selling was heaviest in the long bond as shorter tenors remain near their best levels of the day.
The bid-to-cover ratio of 2.41X vs. six-month average of 2.50X, as was indirect takedown 63.59% vs. six-month average of 69.1%. The desk gave a D- rating on the auction.
Auction Highlights
- Duration: 10 Years
- Amount: $33 billion
- High yield: 3.030% (When-Issued: 3.018%)
- WI level at the time of the auction 3.018%
- Tail 1.2 basis points vs. six-month average of 0.5 basis points
- bid to cover 2.41X vs. six-month average of 2.50X
- directs 19.37% vs. six-month average of 17.3%
- Indirects 63.59% vs. six-month average of 69.1%
- dealers take 17.04% vs. six-month average of 13.5%
Auction grade: D-
Yields after the auction
- 2-yr: +4 bps to 2.76%
- 3-yr: +4 bps to 2.95%
- 5-yr: +5 bps to 3.03%
- 10-yr: +6 bps to 3.03%
- 30-yr: +6 bps to 3.18%
Average results of previous 12 auctions: High yield: 2.005%
- High yield: 1.775%
- Bid-to-cover: 2.51
- Indirect bid: 69.5%
- Direct bid: 16.8%
- 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