The week’s auctions started off with strong demand for the $40 billion 3-year note sale. U.S. Treasuries picked up off their lows after the completion. The sale drew a high yield of 3.695%, which stopped through the when-issued yield by 2.8 bps. The bid-to-cover ratio (2.93x) was comfortably above the prior 12-auction average (2.55x) while indirect takedown (73.3%) was also well above average (60.1%). The desk gave an A rating on the auction. Equities trade in the red.
The U.S. Treasury today also announced they reduced the size of Thursday’s four-week and eight-week bill sales to $35 bln from $50 bln and $35 bln from $45 bln, respectively due to the debt ceiling impasse.
Today’s $40 bln bid-to-cover ratio (2.93x) and indirect takedown (73.3%) were well above average. The desk gave an A rating on the auction.
- The domestic demand was well below its twelve-month average indicative of stronger domestic demand
- International demand (indirect) was comfortably above the six-month average
Auction Highlights
- Duration: 3 Years
- Amount: $40 billion
- High yield: 3.695%
- When-Issued: 3.723%
- Stopped through WI yield by 2.8 bps versus six-month average tail of 0.3 basis points
- Bid to cover 2.93X times versus 12-month average of 2.55X
- Dealers 17.70% versus 21.1% 12-month average of 21.4%
- Directs 13.7% versus 12-month average of 19.4%
- Indirects 73.3% versus 12-month average of 60.1%
Auction grade: A
Yields after the auction
- 2-yr: +4 bps to 4.03%
- 3-yr: +2 bps to 3.74%
- 5-yr: +1 bp to 3.51%
- 10-yr: +1 bp to 3.53%
- 30-yr: +1 bp to 3.85%
Prior auction results:
- High yield: 3.810%
- Bid-to-cover: 2.59
- Indirect bid: 61.3%
- Direct bid: 21.0%
Average results of previous 12 auctions:
- High yield: 3.759%
- Bid-to-cover: 2.55
- Indirect bid: 60.1%
- Direct bid: 19.4%
Live From the Pit
From The TradersCommunity US News Desk