U.S. Treasuries traded just below session highs after the just-completed $16 billion 20-yr bond auction despite it being met with lukewarm demand. The supply was $4 billion more than the last 20’s series. The sale drew a high yield of 4.499%, which tailed the when-issued yield by 0.9 bps. The bid-to-cover ratio (2.56x) was a bit below average (2.62x), as was indirect takedown (68.4% vs 71.2%). Much of the credit market move today has been a reaction to weaker global PMI data with equities gains in response to lower yields. The S&P 500 (+1.0%) and Nasdaq (+1.6%). The desk gave a D rating on the auction.
Today’s $16 bln 20-yr bond tailed the when-issued yield by 0.9 bps. The desk gave a D rating on the auction. Domestic demand was strong. International demand was weak. Bid the cover was below average.
- The domestic demand was above its 12-month average indicative of stronger domestic demand.
- International demand (indirect) was below the 12-month average
- Primary dealers were left with just over 10% versus normal around 10.4%
- Duration: 20 Years
- Amount: $16 billion
- High yield 4.499%
- WI 4.490%
- Tailed the when-issued yield by 0.9 bps.
- Bid to cover 2.56 vs. 12-month average of 2.62X
- Directs 20.2% vs. 12-month average of 18.4%
- Indirects 68.4% vs 12-month average is 71.2%
- Dealers 11.4% vs 12 -month average of 10.4%
Auction grade: D
Yields after the auction.
- 2-yr: -9 bps to 4.95%
- 3-yr: -11 bps to 4.64%
- 5-yr: -12 bps to 4.37%
- 10-yr: -12 bps to 4.21%
- 30-yr: -10 bps to 4.31%
Prior auction results:
- High yield: 4.036%
- Bid-to-cover: 2.68
- Indirect bid: 68.8%
- Direct bid: 21.7%
Average results of previous 12 auctions:
- High yield: 3.924%
- Bid-to-cover: 2.62
- Indirect bid: 71.2%
- Direct bid: 18.4%
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