U.S. Treasuries completed this week’s note auctions and are hanging just below rebound highs in reaction to today’s $38 billion 7-yr note sale, which met much stronger demand than yesterday’s 5-yr note offering and the day before 2-yr note auction. Today’s sale drew a high yield of 4.908%, which stopped through the when-issued yield by 0.2 bps while the bid-to-cover ratio (2.70x) and indirect takedown (70.6%) were above average. Treasuries in the belly have led today’s intraday bounce and remain ahead. Equities sit just above lows breached in the past hour with the S&P 500 down 1.1%. The desk gave a B+ rating for the auction.
- The domestic demand was at its 12-month average indicative of stronger domestic demand
- International demand (indirect) was above the 12-month average.
- Primary dealers were left with 11.60% v 12-month average of 13.2%
- The desk gave a B+ rating on the auction.
- Duration: 7 Years
- Amount: $38 billion
- High-yield 4.908% (When-Issued: 4.910%)
- WI level at the time of the auction 4.910%
- Stopped through the when-issued yield by 0.2 bps
- Bid to cover 2.70X v 12-month average of 2.51X
- Directs 18.4% v 12-month average of 18.4%
- Indirect 70.6% v 12-month average of over 68.4%
- Dealers 11.60% v 12-month average of 13.2%
Auction grade: B+
Yields after the auction.
- 2-yr: -9 bps to 5.03%
- 3-yr: -10 bps to 4.87%
- 5-yr: -10 bps to 4.82%
- 10-yr: -8 bps to 4.87%
- 30-yr: -7 bps to 5.02%
Yields before the auction.
- 2-yr: -4 bps to 5.08%
- 3-yr: -4 bps to 4.93%
- 5-yr: -6 bps to 4.86%
- 10-yr: -3 bps to 4.93%
- 30-yr: -2 bps to 5.08%
Prior auction results:
- High yield: 4.673%
- Bid-to-cover: 2.47
- Indirect bid: 65.5%
- Direct bid: 19.9%
Average results of previous 12 auctions:
- High yield: 3.937%
- Bid-to-cover: 2.51
- Indirect bid: 68.4%
- Direct bid: 18.4%
Bond auctions this week:
New supply this week.
- Monday: 13- and 26-week bills
- Tuesday: 42-day cash management bills, $51 bln 2-yr Treasury note auction results at 13:00 ET
- Wednesday: 17-week bills; 2-year floating rate notes, $52 bln 5-yr Treasury note auction results at 13:00 ET
- Thursday: 4- and 8-week bills; $38 bln 7-yr Treasury note auction results at 13:00 ET
Live From the Pit
From The TradersCommunity US News Desk