U.S. Treasuries saw some renewed selling after the completion of today’s $43 bln 5-yr note auction, which met much weaker demand than yesterday’s 2-yr note sale. Not a surprise there with what we have been seeing on the curve. Today’s sale drew a high yield of 4.019%, which stopped through the when-issued yield by 0.7 bps while the bid-to-cover ratio (2.52x) and indirect takedown (68.1%) were just above average. Another factor was equities trade higher with the S&P 500 (+0.9%) and Nasdaq (+1.2%). The desk gave a C rating on the auction. Today’s sale followed yesterdays $42 bln 2-yr note A- rated auction. Tomorrow sees a $35 bln 7-yr note sale.
Today’s $43 bln bid-to-cover ratio (2.52x) and indirect takedown (68.1%) were above average. The desk gave a C rating on the auction.
- The domestic demand was above its 12-month average indicative of domestic demand higher on the curve.
- International demand (indirect) was above 12-month average.
Auction Highlights
- Duration: 5 Years
- Amount: $43 billion
- High yield 4.019%
- WI level at the time of the option 4.012%
- Stopped through by 0.7 bps basis points
- Bid to cover 2.52X vs 12-month average of 2.45X
- Directs (a measure of domestic demand) 19.7% versus 12-month average of 17.9%
- Indirects (a measure of international demand) 68.1% versus 12-month average of 66.5%
Auction grade: C
Yields after the auction.
- 2-yr: +2 bps to 4.76%
- 3-yr: +7 bps to 4.37%
- 5-yr: +7 bps to 4.03%
- 10-yr: +5 bps to 3.76%
- 30-yr: +2 bps to 3.84%
Prior auction results:
- High yield: 3.749%
- Bid-to-cover: 2.58
- Indirect bid: 72.7%
- Direct bid: 18.0%
Average results of previous 12 auctions:
- High yield: 3.690%
- Bid-to-cover: 2.45
- Indirect bid: 66.5%
- Direct bid: 17.9%
Live From the Pit
From The TradersCommunity US News Desk