U.S. Treasuries trading just below highs after a slow rise off post-CPI lows. The U.S. Treasury completed this week’s note and bond auction offerings with a $20 bln 30-yr bond reopening, which met soft demand. The sale drew a high yield of 4.345%, which tailed the when-issued yield by a basis point while the bid-to-cover ratio (2.46x) was a touch above average (2.39x) and indirect takedown (64.5%) was a bit below average (69.5%). Equities show modest gains with the S&P 500 (+0.3%) trailing the Nasdaq (+0.5%). The Fixed Interest desk rated it a D after this week’s completed $35 bln 10-yr note sale and $44 bln 3-yr note sale.
The bid-to-cover ratio of 2.46X vs 2.39X 12-month average, indirect takedown was 64.5% vs 69.5% 12-month average. The desk gave a D rating on the auction.
Auction Highlights
- Duration: 30 Years
- Amount: $20 billion
- High yield 4.345%
- WI level at time of auction (When-Issued: 4.335%)
- Tailed when-issued yield by 1.4 bps
- Bid to cover 2.46X vs 2.39X 12-month average
- Directs (a measure of domestic demand) 19.7% vs 19.1% 12-month average
- Indirect (a measure of international demand) 64.5% vs 69.5% 12-month average
- Dealers (they take the rest) 15.80% vs. 11.4% 12-month average
Auction grade: D
Yields after the auction.
- 2-yr: -3 bps to 4.97%
- 3-yr: -4 bps to 4.64%
- 5-yr: -2 bps to 4.39%
- 10-yr: -1 bp to 4.26%
- 30-yr: UNCH at 4.35%
The Auction came after the August CPI release for the U.S.
Yields ahead of the auction.
- 2-yr: +2 bps to 5.02%
- 3-yr: +1 bp to 4.69%
- 5-yr: +1 bp to 4.42%
- 10-yr: +2 bps to 4.28%
- 30-yr: +2 bps to 4.36%
Prior auction results:
- High yield: 4.189%
- Bid-to-cover: 2.42
- Indirect bid: 67.8%
- Direct bid: 19.6%
Average results of previous 12 auctions:
- High yield: 3.799%
- Bid-to-cover: 2.39
- Indirect bid: 69.5%
- Direct bid: 19.1%
This Week’s Other Treasury Auctions
Live From the Pit
From The TradersCommunity US News Desk