Auction Reaction
The U.S. Treasury reopened $39 bln in 10-yr notes to strong demand, making for the second solid auction in a row.
Today’s sale drew a high yield of 4.580%, which stopped through the when-issued yield by 0.6 basis points while the bid-to-cover ratio (2.59x vs 2.49x average) and indirect takedown (81.5% vs 69.4% average) were well above average.
Tomorrow, the U.S. Treasury will reopen $22bln in 30-yr bonds.
U.S. Treasuries hover above lows that were reached about two hours ago with the belly showing relative weakness. Yields 5s and shorter tenors are on course to settle at fresh highs for the year while the 10-yr yield is still about ten basis points below its high from early May.
Yields:
2-yr: +6 bps to 4.22%
3-yr: +6 bps to 4.25%
5-yr: +7 bps to 4.32%
10-yr: +5 bps to 4.58%
30-yr: +3 bps to 5.07%
Treasury Auction Results
$39 bln 10-year Treasury note reopening:
High yield: 4.580% (When-Issued: 4.586%)
Bid-to-cover: 2.59
Indirect bid: 81.5%
Direct bid: 10.7%
Average results of previous 12 auctions:
High yield: 4.239%
Bid-to-cover: 2.49
Indirect bid: 69.4%
Direct bid: 20.3%
Prior auction results:
High yield: 4.538%
Bid-to-cover: 2.57
Indirect bid: 78.2%
Direct bid: 12.3%