The US Treasury 7-Year Bond Sale garnered an A rating across the fixed Interest desk in contrast to the 2- and 5-year auction earlier in the week. A day long rally in treasuries accelerated after the completion of today’s $37 bln 7-yr note auction, which met solid demand pressuring yields on 10s and 30s back to their opening levels from Tuesday. The market received comments from several Fed officials ahead of tomorrow’s highly anticipated speech from Fed Chairman Powell at Jackson Hole.
Today’s $37 bln 7-yr note -28 basis point is indicative of strong demand. The average is -0.5 basis points for this issue. 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 under 10% versus normal around 13.9%
Auction Highlights
- Duration: 7 Years
- Amount: $37 billion
- High yields 3.13%
- Tail -2.8 bps
- WI level 3.158%
- Bid to cover 2.65X versus six with average of 2.46X
- Directs 15.7% versus six-month average of 21.8%
- Indirects 75.72% vs sic month average of 64.2%
- Dealers 8.85% versus six month average of 13.9%
Auction grade: A
Yields after the auction
- 2-yr: +2 bps to 3.39%
- 3-yr: -1 bp to 3.36%
- 5-yr: -7 bps to 3.16%
- 10-yr: -8 bps to 3.03%
- 30-yr: -9 bps to 3.23%
Prior auction results:
- High yield: 2.730%
- Bid-to-cover: 2.60
- Indirect bid: 70.9%
- Direct bid: 18.4%
Average results of previous 12 auctions:
- High yield: 3.130% (2.074%).
- Bid-to-cover: 2.65 (2.40).
- Indirect bid: 75.7% (63.9%).
- Direct bid: 15.7% (21.0%).
Live From the Pit
From The TradersCommunity US News Desk