US 10 and 30-yr Treasuries rose to fresh highs after the completion of today’s $38 bln 10-yr note auction, being met with solid demand. The high yield (3.999%) tailed the when-issued yield by 0.1 bps, however the bid-to-cover ratio (2.56x) was well above average (2.42x), as was indirect takedown (72.2% vs 65.0% average). The 2-yr note lags, just above its early low as the risk remains short end ahead of CPI tomorrow. Notably yesterday the $40 bln 3-yr note sale found stronger interest, the shorter date in line with the bond market risk profile. The desk gave a B- rating on the auction.
The U.S. Treasury is working to replenish its General Account with an estimated $1 trillion of Treasury issuance due to the debt ceiling impasse.
The bid to cover 2.56X vs. 12-month average of 2.40X, indirect takedown 72.2% versus 12-month average of 65.0%. The desk gave a B- rating on the auction.
Auction Highlights
- Duration: 10 Years
- Amount: $32 billion
- High yield: 3.999%
- When-Issued level at the time of the auction 3.998%
- Tail 0.9 basis points versus six-month average of 1.4 basis points
- Bid to cover 2.56X vs 12-month average of 2.40X
- Directs 18.3% vs 12-month average of 18.8%
- Indirects 72.2% versus 12-month average of 65.0%
- Dealers 9.5% versus 12-month average of 16.2%
Auction grade: B-
- Directs a measure of domestic demand
- Indirects a measure of international demand
- Dealers take the balance
Yields after the Auction.
- 2-yr: +2 bps to 4.77%
- 3-yr: -1 bp to 4.41%
- 5-yr: -2 bps to 4.10%
- 10-yr: -4 bps to 3.99%
- 30-yr: -4 bps to 4.17%
Yields Before the Auction.
- 2-yr: +1 bp to 4.76%
- 3-yr: -2 bps to 4.40%
- 5-yr: -1 bp to 4.10%
- 10-yr: -2 bps to 4.00%
- 30-yr: -3 bps to 4.18%
Average results of previous 12 auctions:
- High yield: 3.625%
- Bid-to-cover: 2.42
- Indirect bid: 65.0%
- Direct bid: 18.8%
Prior auction results:
- High yield: 3.857%
- Bid-to-cover: 2.53
- Indirect bid: 67.7%
- Direct bid: 19.9%
- 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