Strong Demand at U.S. 20-year Treasury Bond Auction as Markets Wind Down for Christmas

U.S. Treasuries received a boost from today’s $12 billion 20-yr Treasury bond reopening, which met strong demand, which had not been seen in recent sales of this tenor. Treasuries were higher after the auction’s completion, but eventually rested back at the levels just before the bond sale. The high yield tailed the when-issued yield by 1.3 bps with the bid-to-cover ratio 2.68x. The desk gave an A rating on the auction. Stocks rebounded today ahead of the latest reading of US GDP tomorrow.

Today’s $12 bln 20-yr bond -1.3 basis point indicative of strong international demand. The desk gave an A rating on the auction.

  • The domestic demand was above its six-month average indicative of solid domestic demand
  • International demand (indirect) was also comfortably above the six-month average
  • Primary dealers were left with just over 8.7% versus normal around 11.5%

Auction Highlights

  • Duration: 20 Years
  • Amount:  $12 billion
  • High yield 3.935%
  • WI 3.948%
  • Tail -1.3 basis points vs. six-month average of -0.3 basis points
  • Bid to cover  2.68X vs. six-month average of 2.56X
  • Directs 19.0% vs six-month average of 17.4%
  • Indirects 72.3% vs six-month average of 71.1%
  • Dealers 8.7% vs six-month average of 11.5%

Auction grade: A

Yields after the auction

  • 2-yr: -5 bps to 4.22%
  • 3-yr: -4 bps to 3.98%
  • 5-yr: -1 bp to 3.77%
  • 10-yr: -1 bp to 3.67%
  • 30-yr: UNCH at 3.74%

Prior auction results:

  • High yield: 3.820%
  • Bid-to-cover: 2.65
  • Indirect bid: 75.3%
  • Direct bid: 16.6%

Average results of previous 12 auctions:

  • High yield: 3.131%
  • Bid-to-cover: 2.54
  • Indirect bid: 68.9%
  • Direct bid: 17.9%

Live From the Pit

From The TradersCommunity US News Desk