Key Treasury Bond Auctions Along Yield Curve Next Week To Test Investor Resolve

Following the turmoil in the market this week and last from the new B.1.1.529 variant now known as Omicron has scientists concerned for two primary reasons. Federal Reserve System Chairman Jerome Powell took a decidedly hawkish tone today which sent US stock markets lower. Fed Chair Powell said it’s a good time to retire the word “transitory” and suggests its appropriate to taper more quickly.

The U.S. Treasury has announced that next week they will auction

  • $54 billion three year notes
  • $36 billion of 10 year notes, and 
  • $22 billion of 30 year bonds 

Two weeks ago the US Treasury 20-Year Bond Sale performed much worse than expected, garnering a D rating across the Fixed Interest desk. The tail was a lengthy 1.4 basis points with WI level at time of the auction 2.051% and the high yield of 2.065% at the auction.

Heading into the auction the 10 year benchmark yield was down -2.1 basis points and the 30 year was down -0.9 basis points. Both were trading at or near the low yield for the session

20 Year Auction Highlights

  • Duration: 20 Years
  • Amount:  $23 billion
  • High yield 2.065% (prev 2.100%)
  • WI level at time of auction 2.051%
  • Tail +1.4 basis points
  • Bid-Cover Ratio: 2.34 (prev 2.25) vs six month average of 2.34X
  • Direct Accepted: 19.4% (prev 15.6%) vs six month average of 18.7%
  • Indirect Accepted: 60.2% (prev 64.8%) vs six month average of 61.7%
  • Dealers 20.4% vs six month average of 19.6%

Auction grade: D+

Live From ThePit

From The TradersCommunity US News Desk