U.S. Treasuries trading saw the long bond slip to a fresh low after the completion of today’s $23 bln 30-yr bond auction, which met soft demand. Shorter tenors remain a touch above their worst levels of the day. The sale drew a high yield of 4.189%, which tailed the when-issued yield by 1.4 bps, the bid-to-cover ratio (2.42x) was a touch above average (2.38x) and indirect takedown (67.8%) was shy of average (69.8%). The sale completed this week’s note and bond auction offerings with sales taking place against the backdrop of rising yields. The Fixed Interest desk rated it a D after this week’s completed $35 bln 10-yr note sale and $40 bln 3-yr note sale.
The bid-to-cover ratio of 2.42X vs 2.38X 12-month average, indirect takedown was 67.8% vs 69.8% 12-month average. The desk gave a C- rating on the auction.
Auction Highlights
- Duration: 30 Years
- Amount: $18 billion
- High yield 4.189%
- WI level at time of auction 4.175%
- Tailed when-issued yield by 1.4 bps
- Bid to cover 2.42X vs 2.38X 12-month average
- Directs (a measure of domestic demand) 19.6% vs 19.0% 12-month average
- Indirect (a measure of international demand) 67.8% vs 69.8% 12-month average
- Dealers (they take the rest) 12.60% vs. 11.2% 12-month average
Auction grade: D
Yields after the auction
- 2-yr: -2 bps to 4.78%
- 3-yr: -2 bps to 4.42%
- 5-yr: +1 bp to 4.14%
- 10-yr: +2 bps to 4.03%
- 30-yr: +2 bps to 4.20%
The Auction came after the July CPI release for the U.S.
Yields ahead of the auction.
- 2-yr: -1 bp to 4.79%
- 3-yr: -2 bps to 4.42%
- 5-yr: UNCH at 4.13%
- 10-yr: UNCH at 4.01%
- 30-yr: +1 bp to 4.19%
Prior auction results:
- High yield: 3.910%
- Bid-to-cover: 2.43
- Indirect bid: 69.0%
- Direct bid: 20.1%
Average results of previous 12 auctions:
- High yield: 3.709%
- Bid-to-cover: 2.38
- Indirect bid: 69.8%
- Direct bid: 19.0%
This Week’s Other Treasury Auctions
Live From the Pit
From The TradersCommunity US News Desk