Treasuries Pull Back After Weak Demand for U.S. 3-year Bond Auction with High Yield of 2.927%

U.S. Treasuries pulled back from highs after the US Treasury 3-Year Bond Sale performed much worse than expected, garnering a D+ rating across the Fixed Interest desk with weak demand from the international market. The tail was -1 basis points with WI level at time of the auction 2.917% and the high yield of 2.927% at the auction. Weak demand ahead of the results of this month’s auctions of $33 billion worth of ten-year notes and $19 billion worth of thirty-year bonds on Wednesday and Thursday, respectively.

The bid-to-cover 2.45X vs. was below six-month average of 2.47X, as was indirect takedown 651.51% vs. six-month average of 59.0%. The desk gave a D+ rating on the auction.

Auction Highlights

  • Duration: 3 Years
  • Amount:  $45 billion
  • High yield 2.809% (prev 2.738%) (When-Issued: 2.812%)
  • Tail -1.0 basis points
  • Bid to cover 2.45X vs. six-month average of 2.47X
  • Directs 23.57% vs. six-month average of 16.5%
  • Indirects 51.51% vs. six-month average of 59.0%
  • Dealers 24.91% vs six-month average of 24.8%

Auction grade: D+

Yields after the auction

  • 2-yr: +2 bps to 2.74%
  • 3-yr: -2 bps to 2.91%
  • 5-yr: -3 bps to 3.00%
  • 10-yr: -4 bps to 2.99%
  • 30-yr: -5 bps to 3.14%

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

  • High yield: 1.183%
  • Bid-to-cover: 2.45
  • Indirect bid: 56.2%
  • Direct bid: 17.5%

Live From the Pit

From The TradersCommunity US News Desk