U.S. Treasuries sold off, lifting lifted yields on all tenors to fresh highs for the year after the completion of a dismal $12 billion 20-year Treasury bond reopening, which was met with lukewarm demand. The high yield tailed the when-issued yield by 2.5 bps with the bid-to-cover ratio 2.50x. The desk gave an F rating on the auction. The US 30-year fixed mortgage rate hits a 20 year high of 7.22% today on the surge in the 10-year yield. The S&P 500 and Nasdaq 100 are near the low for the week ahead of the Fed Beige Book.
Today’s $12 bln 20-yr bond -1.2 basis point indicative of strong international demand and soft. The desk gave an B rating on the auction.
- The domestic demand was below its six-month average indicative of softer domestic demand
- International demand (indirect) was also comfortably above the six-month average
- Primary dealers were left with just over than 10% versus normal around 14.3%
Auction Highlights
- Duration: 20 Years
- Amount: $12 billion
- High yield 4.395%
- WI 4.370%
- Tail +2.5 basis points vs. six-month average of -1.3 basis points
- Bid to cover 2.50X vs. six-month average of 2.69X
- Directs 19.86% vs. six-month average of 18.5%
- Indirects 63.7% vs six-month average is 72.2%
- Dealers 16.43% vs six-month average of 9.3%
Auction grade: F
Yields after the auction
- 2-yr: +11 bps to 4.55%
- 3-yr: +13 bps to 4.56%
- 5-yr: +13 bps to 4.34%
- 10-yr: +12 bps to 4.12%
- 30-yr: +10 bps to 4.12%
Prior auction results:
- High yield: 3.820%
- Bid-to-cover: 2.65
- Indirect bid: 75.3%
- Direct bid: 16.6%
Average results of previous 12 auctions:
- High yield: 2.750%
- Bid-to-cover: 2.50
- Indirect bid: 68.1%
- Direct bid: 17.8%
Live From the Pit
From The TradersCommunity US News Desk