US Treasuries saw some buying interest after the completion of a robust $40 bln 3-year note sale. The auction drew a high yield of 3.977%, which stopped through the when-issued yield by 2.3 bps. The bid-to-cover ratio (2.84x) and indirect takedown (69.5%) were well above average. The strong results point to new year buying and limited concern ahead of Thursday’s release of the CPI report for December. The desk gave a B rating on the auction. The S&P 500 and Nasdaq 100 were near the high for the day around the auction results. Treasuries remained just above their lows into the close.
Today’s $40 bln bid-to-cover ratio (2.84x) and indirect takedown (69.5%) were above average. The desk gave a B rating on the auction.
- The domestic demand was below its twelve-month average indicative of softer domestic demand
- International demand (indirect) was comfortably above the six-month average
Auction Highlights
- Duration: 3 Years
- Amount: $40 billion
- High yield 3.977%
- WI level 4.000%
- Tail -2.3 basis points vs. six-month average of 0.2 basis points
- Bid to cover 2.84X versus six-month average of 2.52X
- Directs 13.2% versus a six-month average of 19.3%
- Indirect 69.5% versus six-month average of 59.2%
- Primary dealers 17.3% versus six-month average of 21.5%
Auction grade: B
Yields after the auction
- 2-yr: +6 bps to 4.26%
- 3-yr: +8 bps to 4.00%
- 5-yr: +8 bps to 3.73%
- 10-yr: +10 bps to 3.62%
- 30-yr: +11 bps to 3.76%
Prior auction results:
- High yield: 4.093%
- Bid-to-cover: 2.55
- Indirect bid: 61.7%
- Direct bid: 20.4%
Average results of previous 12 auctions:
- High yield: 2.996%
- Bid-to-cover: 2.50
- Indirect bid: 59.0%
- Direct bid: 18.3%
Live From the Pit
From The TradersCommunity US News Desk