U.S. Treasuries back-end drew interest from buyers after the completion of the $15 billion 20-year Treasury bond reopening which saw a high yield of 4.072% with a healthy 2.64 bid-to-cover ratio. Indirect bidders accounted for 75% of the accepted bids. The desk gave an A- rating on the auction. The 3-mo/10-yr spread widened to 53 basis points from 38 basis points and contributed to the hard-landing concerns along with a dismal holiday quarter sales outlook from Target (TGT) in their Q3 earnings report.
Today’s $15 bln 20-yr bond -2.9 basis point indicative of strong international demand. The desk gave an A- rating on the auction.
- The domestic demand was below its six-month average indicative of softer domestic demand
- International demand (indirect) was also comfortably above the six-month average
- Primary dealers were left with just under 10% versus normal around 14.3%
Auction Highlights
- Duration: 20 Years
- Amount: $15 billion
- High yield 4.072%
- WI level 4.101%
- Tail -2.9 bps
- Bid to cover 2.64X vs 2.53X
- Directs (domestic demand) 15.4% vs 6 month avg of 17.6%
- Indirects (international demand) 75.4% vs 6 month avg of 70.3%
- Dealers 9.3% vs 6 month average of 12.1%
Auction grade: A-
Yields after the auction
- 2-yr: +2 bps to 4.37%
- 3-yr: -1 bp to 4.15%
- 5-yr: -5 bps to 3.87%
- 10-yr: -9 bps to 3.71%
- 30-yr: -12 bps to 3.87%
Prior auction results:
- High yield: 4.395%
- Bid-to-cover: 2.50X
- Indirect bid: 63.7%
- Direct bid: 16.43%
Average results of previous 12 auctions:
- High yield: 2.750%
- Bid-to-cover: 2.50
- Indirect bid: 68.1%
- Direct bid: 17.8%
Live From the Pit
From The TradersCommunity US News Desk