U.S. Treasuries were higher even after the completion of today’s $35 billion 7-yr note auction, demand was steady in a holiday week with a high yield of 3.921%, which tailed the when-issued yield 3.913% by 0.7 bps. The bid-to-cover ratio (2.45x) was below average (2.57x) and so was indirect takedown (68.1% vs. 68.7% average). The fixed interest desk rated the auction a C. Yesterday there the Treasury auctioned $43 bln 5-yr notes. Of note the US dollar has been under pressure today, DXY down 0.6% to 103.85 its lowest levels since June. A resurgent yen (USD/JPY -1.1% to 132.96) as JGB yields moved higher.
Today’s $35 bln 7-yr note -.8 basis point tail is indicative of steady demand. The desk gave a C rating on the auction.
- The domestic demand was above its six-month average indicative of stronger domestic demand
- International demand (indirect) was comfortably below the six-month average
- Primary dealers were left with over 15.75% versus normal around 11.7%
Auction Highlights
- Duration: 7 Years
- Amount: $35 billion
- High yield of 3.921%
- WI 3.913%
- Tail 2.7 basis points vs. six-month average of -0.4 basis points
- bid to cover 2.45 vs. 2.57 X
- dealers 15.75% vs. six-month average of 11.7%
- directs 16.2% vs. six-month average of 19.6%
- indirects 68.1% vs. six-month average of 68.7%
Auction grade: C
Yields after the auction
- 2-yr: +2 bps to 4.37%
- 3-yr: +1 bp to 4.18%
- 5-yr: -5 bps to 3.93%
- 10-yr: -6 bps to 3.83%
- 30-yr: -5 bps to 3.92%
Prior auction results:
- High yield: 3.890%
- Bid-to-cover: 2.33
- Indirect bid: 61.8%
- Direct bid: 16.8%
Average results of previous 12 auctions:
- High yield: 2.858%
- Bid-to-cover: 2.46
- Indirect bid: 65.5%
- Direct bid: 20.8%
Live From the Pit
From The TradersCommunity US News Desk