Impressive 30-year Treasury Bond Sale Completes Strong Week of Auctions

The U.S. Treasury completed this week’s note and bond auction offerings today with another strong auction. U.S. Treasuries rallied off afternoon lows back to their starting levels after the U.S. Treasury’s $25 billion 30-yr bond sale. The auction drew a high yield of 4.360%, which stopped through the when-issued yield by two basis points. The bid-to-cover ratio (2.40x) was comfortably above average (2.38x), as was indirect takedown (70.7% vs 67.8% average). The S&P 500 continues to hover near record highs while the Nasdaq (+0.3%) outperforms. Today followed the $42 billion 10-yr note reopening, which met strong demand and a solid 3-yr note sale. The Fixed Interest desk rated it an A.

Auction Highlights

  • Duration: 30 Years
  • Amount:  $21 billion
  • High yield 4.360%
  • WI level at time of auction: 4.380%
  • Stopped through the when-issued yield by two basis points.
  • Bid to cover 2.40X vs 2.39X 12-month average
  • Directs (a measure of domestic demand) 14.5% vs 18.4% 12-month average
  • Indirect (a measure of international demand) 70.7% vs 67.8% 12-month average
  • Dealers (they take the rest) 14.8% vs. 13.8% 12-month average

Auction grade: A

Yields after the auction.

  • 2-yr: +3 bps to 4.45%
  • 3-yr: +4 bps to 4.23%
  • 5-yr: +6 bps to 4.12%
  • 10-yr: +6 bps to 4.17%
  • 30-yr: +7 bps to 4.38%

Yields ahead of the auction.

  • 2-yr: +1 bp to 4.43%
  • 3-yr: +3 bps to 4.22%
  • 5-yr: +4 bps to 4.10%
  • 10-yr: +3 bps to 4.14%
  • 30-yr: +4 bps to 4.35%

Prior auction results:

  • High yield: 4.344%
  • Bid-to-cover: 2.43
  • Indirect bid: 68.5%
  • Direct bid: 17.3%

Average results of previous 12 auctions:

  • High yield: 4.125%
  • Bid-to-cover: 2.38
  • Indirect bid: 67.8%
  • Direct bid: 18.4%

This Week’s Other Treasury Auctions

  • Monday: $79 billion 13-week bills, $70 billion 26-week bills
  • Tuesday: $80 billion 42-day cash management bills, $54 bln 3-yr Treasury note auction results at 13:00 ET
  • Wednesday: $56 billion 17-week bills, $42 bln 10-yr Treasury note auction results at 13:00 ET;
  • Thursday: $80 billion 4- and 8-week bills, $25 bln 30-yr Treasury bond auction results at 13:00 ET

Live From the Pit

From The TradersCommunity US News Desk