The US Treasury 30-Year Bond Sale of $19 billion performed stronger than the recent steady 3 and dismal 10-year auctions. The report followed US consumer inflation hitting +9.1% y/y vs +8.6% expected. Prices for energy jumped 41.6% from a year earlier, the most since April of 1980 and food prices jumped 10.4%, the largest 12-month increase since February of 1981. The tail was -1.8 basis points with WI level at time of the auction 3.133% and the high yield of 3.115% at the auction. The Fixed Interest desk rated it an A after yesterday’s D- on the 10-year auction.
The bid-to-cover ratio of 2.44x was above average 2.33x, as was indirect takedown 73.2% vs 66.6% average. The desk gave an A rating on the auction. Today’s buying after the hotter than expected inflation report for June suggests the bond market is already looking past inflation-related headlines to an expected deceleration in growth.
Auction Highlights
- Duration: 30 Years
- Amount: $19 billion
- High yield 3.115%
- WI level at time of auction 3.133%
- Tail -1.8 basis points
- Bid-Cover Ratio: 2.44X vs six-month average of 2.33X
- Direct Accepted: 16.34% vs six-month average of 17.6%
- Indirect Accepted: 73.2% vs. six-month average of 66.6
- Dealers 10.46% vs six-month average of 15.8%
Auction grade: A
Yields after the auction
- 2-yr: +7 bps to 3.10%
- 3-yr: +5 bps to 3.12%
- 5-yr: -1 bp to 3.00%
- 10-yr: -5 bps to 2.91%
- 30-yr: -5 bps to 3.09%
Prior auction results:
- High yield: 3.185%
- Bid-to-cover: 2.35
- Indirect bid: 69.0%
- Direct bid: 16.9%
Yields ahead of the auction
- 2-yr: +3 bps to 2.80%
- 3-yr: +3 bps to 2.99%
- 5-yr: +4 bps to 3.07%
- 10-yr: +2 bps to 3.04%
- 30-yr: +1 bp to 3.18%
Average results of previous 12 auctions: High yield: 2.005%
- High yield: 2.409%
- Bid-to-cover: 2.34
- Indirect bid: 66.6%
- Direct bid: 17.5%
Live From the Pit
From The TradersCommunity US News Desk