U.S. Treasuries added to their lows after the recent completion of a $43 billion 5-yr note sale, which met strong demand which followed yesterday’s equally impressive 2-yr note auction. The high yield (3.749%) stopped through the when-issued yield by 1.4 bps while the bid-to-cover ratio (2.58x) and indirect takedown (72.7%) were above average. With increasing uncertainty over the debt ceiling equities have been selling off. The desk gave a B- rating on the auction. Today’s sale followed yesterdays $42 bln 2-yr note B+ rated auction. Tomorrow sees a $35 bln 7-yr note sale.
Today’s $43 bln bid-to-cover ratio (2.58x) and indirect takedown (71.7%) were above average. The desk gave a B+ rating on the auction.
- The domestic demand was at its 12-month average indicative of domestic demand lower on the curve.
- International demand (indirect) was comfortably above 12-month average.
Auction Highlights
- Duration: 5 Years
- Amount: $43 billion
- High yield 3.749%
- WI level at the time of the option 3.753%
- Stopped through by 1.4 bps basis points versus the 6 month average of -0.6 basis points
- Bid to cover 2.58X vs 12-month average of 2.44X
- Directs (a measure of domestic demand) 18.0% versus 12-month average of 18.0%
- Indirects (a measure of international demand) 72.7% versus 12-month average of 65.7%
Auction grade: B+
Yields after the auction.
- 2-yr: UNCH at 4.34%
- 3-yr: +5 bps to 4.03%
- 5-yr: +3 bps to 3.78%
- 10-yr: +2 bps to 3.72%
- 30-yr: +1 bp to 3.97%
Prior auction results:
- High yield: 3.500%
- Bid-to-cover: 2.54
- Indirect bid: 69.1%
- Direct bid: 17.3.%
Average results of previous 12 auctions:
- High yield: 3.606%
- Bid-to-cover: 2.44
- Indirect bid: 65.7%
- Direct bid: 18.0%
Live From the Pit
From The TradersCommunity US News Desk