U.S. Treasuries longer tenors continued to fresh lows, reaching their worst levels shortly after today’s $15 bln 20-yr bond sale, which met tepid demand. Today’s sell off lifted the 5-yr yield to its highest level since early November while the 10-yr yield finished at a six-week high. The market is positioning for tomorrow’s PPI report for January. The completion of today’s $12 bln 20-yr Treasury bond reopening, followed the path of last week’s 3- and 30-year auctions meeting tepid demand. The desk gave a C+ rating on the auction.
Today’s $15 bln 20-yr bond 0.2 basis point tailh indicative of tepid international demand. The desk gave a C+ rating on the auction.
- The domestic demand was above its six-month average indicative of normal domestic demand
- International demand (indirect) was comfortably above the six-month average
- Primary dealers were left with just over 6.73% versus normal around 10.9%
Auction Highlights
- Duration: 20 Years
- Amount: $15 billion
- High yield 3.977%
- WI 3.975%
- Tail +0.2 basis points versus six-month average of -0.6 basis points
- Directs 17.97% versus six-month average of 17.5%
- Indirects 75.3% versus six-month average of 71.7%
- Dealers 6.73% versus six-month average of 10.9%
Auction grade: C+
Yields after the auction.
- 2-yr: -2 bps to 4.61%
- 3-yr: +2 bps to 4.35%
- 5-yr: +3 bps to 4.03%
- 10-yr: +4 bps to 3.80%
- 30-yr: +5 bps to 3.85%
Prior auction results:
- High yield: 3.935%
- Bid-to-cover: 2.68
- Indirect bid: 72.3%
- Direct bid: 19.0%
Average results of previous 12 auctions:
- High yield: 3.432%
- Bid-to-cover: 2.59
- Indirect bid: 70.9%
- Direct bid: 17.4%
Auction Measure Definitions
- Directs a measure of domestic demand
- Indirects a measure of international demand
- Dealers take the balance
Live From the Pit
From The TradersCommunity US News Desk