Strong U.S. 20-year Treasury Bond Auction with High Yield of 2.210%

The US Treasury 20-Year Bond Sale performed much better than expected, garnering an A- rating across the Fixed Interest desk with strong demand from the international market. The tail was -1.5 basis points with WI level at time of the auction 2.225% and the high yield of 2.210% at the auction. Ahead of the auction U.S. Treasuries yields were higher across the curve (bearish). The 2-yr yield was up three basis points to 0.65%, 10-yr yield up three basis points to 1.45%. 30-yr yields up 6.5 bps.

Today’s $20 bln 20-yr bond reopening met solid demand with a high yield of 2.210%. The tail of the when-issued yield was 1.5 bps. The bid-to-cover ratio of 2.48x was above average 2.36x, as was indirect takedown 66.2% vs 60.8% average. The desk gave an A rating on the auction.

Auction Highlights

  • Duration: 20 Years
  • Amount:  $20 billion
  • High yield 1.942% (prev 1.942%)
  • WI level at time of auction 2.225% Prev (1.965%)
  • Tail -1.5 basis points (prev -2.3 basis points) vs 6 month average of 1.2 bps
  • Bid-Cover Ratio: 2.48X (prev 2.59) vs six month average of 2.36X
  • Direct Accepted: 17.0% (prev 20.83%) vs six month average of 18.8%
  • Indirect Accepted: 66.2% (prev 64.83%) vs six month average of 62.8%
  • Dealers 16.8% (prev 14.34%) vs six month average of 18.4%

Auction grade: A

Yields after the auction

  • 2-yr: -2 bps to 1.01%
  • 3-yr: -4 bps to 1.31%
  • 5-yr: -4 bps to 1.61%
  • 10-yr: -4 bps to 1.83%
  • 30-yr: -4 bps to 2.14%

Average results of previous 12 auctions: High yield: 2.005%

  • Bid-to-cover: 2.36
  • Indirect bid: 60.8%
  • Direct bid: 18.3%

Live From the Pit

From The TradersCommunity US News Desk