Treasuries fell to lows after the completion of today’s soft $42 bln 2-yr note auction. The sale drew a high yield of 3.954% which tailed the when-issued yield by 2.7 bps while the bid-to-cover ratio (2.44x) and indirect takedown (52.8%) were below average. Today’s auction will be followed by a $43 bln 5-yr note offering tomorrow and a $35 bln 7-yr note sale on Wednesday. The desk gave a D- rating on the auction.
Today’s $42 bln bid-to-cover ratio (2.44x) and indirect takedown (52.8%) were below average. The desk gave a D rating on the auction.
- The domestic demand was below its twelve-month average indicative of softer domestic demand
- International demand (indirect) was also comfortably below the six-month average
- Primary dealers were left with 21.9 % versus normal around 22.2%
Auction Highlights
- Duration: 2 Years
- Amount: $42 billion
- High yield 3.954%
- WI 3.927%
- Tail -2.7 BPs.
- bid to cover 2.44x vs 12-month average of 2.62X
- Dealers 23.0% vs. 12-month average 19.1%
- Direct 24.2% vs. 12-month average of 22.0%
- Indirects 52.8% vs.12-month average of 58.9%
Auction grade: D
Yields after the auction
- 2-yr: +23 bps to 4.00%
- 3-yr: +20 bps to 3.79%
- 5-yr: +18 bps to 3.59%
- 10-yr: +14 bps to 3.52%
- 30-yr: +9 bps to 3.74%
Prior auction results:
- High yield: 4.673%
- Bid-to-cover: 2.61
- Indirect bid: 62.0%
- Direct bid: 23.0%
Average results of previous 12 auctions:
- High yield: 3.610%
- Bid-to-cover: 2.62
- Indirect bid: 58.9%
- Direct bid: 22.0%
Live From the Pit
From The TradersCommunity US News Desk