U.S. Treasuries pulled back from their highs in reaction to the completion of today’s $18 bln 30-yr bond reopening meeting soft demand. The sale drew a high yield of 3.910%, which tailed the when-issued yield by two basis points. The bid-to-cover ratio (2.43x) was a above average (2.38x) while indirect takedown (69.0%) was below average (70.1%). The sale completed this week’s note and bond auction offerings with sales taking place against the backdrop of falling yields. The Fixed Interest desk rated it a C- after yesterday’s completed $35 bln 10-yr note sale and $40 bln 3-yr note sale.
After today’s rally, the 10-yr yield is now down 31 basis points from Friday’s high. Equities have been on the march higher aided by softer CPI and PPI reports. S&P 500 is up +0.6% and Nasdaq up +1.2%.
The bid-to-cover ratio of 2.43X vs 2.38X 12-month average, indirect takedown was 69.0% vs 69.8% 12-month average. The desk gave an C- rating on the auction.
Auction Highlights
- Duration: 30 Years
- Amount: $18 billion
- High yield 3.910%
- WI level at time of auction 3.890%
- Tailed the when-issued yield by two basis points
- Bid to cover 2.43X vs 2.38X 12-month average
- Directs (a measure of domestic demand) 20.1% vs 18.6% 12-month average
- Indirect (a measure of international demand) 69.0% vs 69.8% 12-month average
- Dealers (they take the rest) 9.00% vs. 11.6% 12-month average
Auction grade: C-
Yields after the auction
- 2-yr: -8 bps to 4.65%
- 3-yr: -13 bps to 4.25%
- 5-yr: -12 bps to 3.95%
- 10-yr: -9 bps to 3.77%
- 30-yr: -4 bps to 3.91%
The Auction came after the June PPI and CPI releases for the U.S.
Yields ahead of the auction.
- 2-yr: -7 bps to 4.66%
- 3-yr: -10 bps to 4.28%
- 5-yr: -7 bps to 4.00%
- 10-yr: -5 bps to 3.81%
- 30-yr: -1 bp to 3.94%
Prior auction results:
- High yield: 3.908%
- Bid-to-cover: 2.52
- Indirect bid: 72.9%
- Direct bid: 18.1%
Average results of previous 12 auctions:
- High yield: 3.583%
- Bid-to-cover: 2.37
- Indirect bid: 69.8%
- Direct bid: 18.6%
This Week’s Other Treasury Auctions
Live From the Pit
From The TradersCommunity US News Desk