The US Treasury 10-Year Bond Sale performed better than expected after a lighter than expected CPI number released early in the day. The auction garnered an A rating across the Fixed Interest desk with weak demand from the international market. The tail was -0.6 basis points with When-Issued 2.761% at time of the auction 3.018% and the high yield of 2.755% at the auction. The post-auction selling was heaviest in the long bond as shorter tenors remain near their best levels of the day.
The bid-to-cover ratio of 2.53X vs. six-month average of 2.50X, indirect takedown 74.5% vs. six-month average of 69.1%. The desk gave a D- rating on the auction.
Auction Highlights
- Duration: 10 Years
- Amount: $35 billion
- High yield: 2.755% (When-Issued: 2.761%)
- WI level at the time of the auction 2.761%
- Tail 0.6 basis points vs. six-month average of 0.5 basis points
- bid to cover 2.53X vs. six-month average of 2.50X
- Directs 15.6% vs. six-month average of 17.3%
- Indirects 74.5% vs. six-month average of 69.1%
- dealers take 7.90% vs. six-month average of 13.5%
Auction grade: A
Yields after the auction
- 2-yr: +4 bps to 2.76%
- 3-yr: +4 bps to 2.95%
- 5-yr: +5 bps to 3.03%
- 10-yr: +6 bps to 3.03%
- 30-yr: +6 bps to 3.18%
Average results of previous 12 auctions: High yield: 2.035%
- High yield: 1.775%
- Bid-to-cover: 2.51
- Indirect bid: 69.5%
- Direct bid: 16.8
Prior auction results:
- High yield: 2.960%
- Bid-to-cover: 2.34
- Indirect bid: 61.3%
- Direct bid: 18.0%
Average results of previous 12 auctions
- High yield: 2.035%
- Bid-to-cover: 2.49
- Indirect bid: 69.2%
- Direct bid: 16.9%
- 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