US Treasury yields on the 10-yr note and the 30-yr bond are back at their highest levels of the day after the 10-Year Bond Sale performed worse than expected ahead of tomorrow’s CPI number release. The auction garnered a F rating across the Fixed Interest desk after the high yield tailed the when-issued yield by 3.4 bps. The bid-to-cover ratio (2.23x) and indirect takedown (57.5%) were well below average. The reopening follows strong demand in yesterday’s 40 billion 3-yr note auction and it sets the stage for an $18 bln 30-yr bond reopening tomorrow. Equities are treading water after the midterm election and the cryptocurrency collapse.
The bid to cover 2.23X vs. six-month average of 2.41X, indirect takedown 57.5 percent vs. the six-month average of 64.8%. The desk gave a F rating on the auction.
Auction Highlights
- Duration: 10 Years
- Amount: $35 billion
- High yield: 4.14%
- When-Issued level at the time of the auction 4.106%
- Tail 3.4 basis points vs. six-month average of 1.3 basis points
- Bid to cover 2.23X vs. the six-month average of 2.41X
- Directs 18.1% vs. six-month average of 18.8%
- Indirects 57.5% vs. six-month average of 64.8%
- Dealers 24 4% vs. the six-month average of 16.4%
Auction grade: F
Yields after the auction
- 2-yr: UNCH at 4.66%
- 3-yr: -2 bps to 4.55%
- 5-yr: -1 bp to 4.30%
- 10-yr: +4 bps to 4.16%
- 30-yr: +6 bps to 4.32%
Average results of previous 12 auctions:
- High yield: 2.515%
- Bid-to-cover: 2.45
- Indirect bid: 67.0%
- Direct bid: 17.7%
Prior auction results:
- High yield: 3.930%
- Bid-to-cover: 2.34
- Indirect bid: 56.8%
- Direct bid: 23.5%
- 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