U.S. Treasuries completed this week’s note auctions with excellent demand for the $35 bln 7-yr note auction. Treasuries trade just below session highs with 10-yr note and shorter tenors climb to fresh highs after the auction. The sale drew a high yield of 3.839%, which stopped through the when-issued yield by 1.1 bps while the bid-to-cover ratio (2.65x) and indirect takedown (75.3%) were comfortably above average. The desk gave an A- rating on the auction. Yesterday treasuries completed a $43 bln 5-yr note auction which met softer demand. Tuesday, we saw a $42 bln 2-yr note A rated auction. Equities trade near flat lines with S&P 500 -0.2% with Nasdaq (unchanged.
- The domestic demand was below its six-month average indicative of weaker domestic demand
- International demand (indirect) was above the 12-month average.
- Primary dealers were left with 9.1% versus normal around 13.4%
- The desk gave an A- rating on the auction.
Auction Highlights
- Duration: 7 Years
- Amount: $35 billion
- High-yield 3.839%
- WI level at the time of the auction 3.850%
- Tail 1.3 basis points vs six-month average of +0.9 basis points
- Bid to cover 2.65X v 12-month average of 2.51X
- Directs 16.6% v 12-month average of 19.4%
- Indirect 75.3% v 12-month average of over 67.2%
- Dealers 9.1% v 12-month average of 13.4%
Auction grade: A
Yields after the auction.
- 2-yr: -5 bps to 4.71%
- 3-yr: -3 bps to 4.34%
- 5-yr: -6 bps to 3.98%
- 10-yr: -5 bps to 3.72%
- 30-yr: -3 bps to 3.81%
Yields before the auction.
- 2-yr: UNCH at 4.76%
- 3-yr: +1 bp to 4.38%
- 5-yr: -2 bps to 4.02%
- 10-yr: -2 bps to 3.75%
- 30-yr: -1 bp to 3.83%
Prior auction results:
- High yield: 3.827%
- Bid-to-cover: 2.61
- Indirect bid: 72.3%
- Direct bid: 17.3%
Average results of previous 12 auctions:
- High yield: 3.623%
- Bid-to-cover: 2.51
- Indirect bid: 67.2%
- Direct bid: 19.4%
Live From the Pit
From The TradersCommunity US News Desk