Another Weak U.S. 10-year Treasury Bond Auction Graded D Minus with High Yield of 3.03% and 1.2 Basis Point Tail 

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