U.S. Treasuries sold off, with shorter tenors leading the fall while the long bond outperformed, recording a slim loss. Today’s $12 bln 20-yr bond reopening met decent demand with longer tenors extending their rebound after the completion of the sale. The auction saw a high yield of 3.920%, WI level at the time of the auction 3.918%, bid-to-cover 2.66 versus 12-month average 2.60 and the indirect bid at 68.7% less than average 72.0%. The Treasury market faced pressure from the get-go after the release of stubbornly high inflation readings from both the eurozone and the U.K. The desk gave a C rating on the auction.
Today’s $12 bln 20-yr bond -0.2 basis point indicative of soft international demand. The desk gave a C rating on the auction.
- The domestic demand was above its six-month average indicative of stronger domestic demand
- International demand (indirect) was comfortably below the six-month average
- Primary dealers were left with just over than 12.05% versus normal around 10.2%
Auction Highlights
- Duration: 20 Years
- Amount: $12 billion
- High yield 3.920%
- WI 3.918%
- Tail -0.2 versus -0.7 basis points 6 month average
- Directs (a measure of domestic demand) 19.24% versus 18.2% 6 month average
- Indirects (a measure of international demand) 68.72% versus 71.7% 6 month average
- Dealers 12.05% versus 10.2% 6 month average
Auction grade: C
Yields after the auction
- 2-yr: +5 bps to 4.26%
- 3-yr: +6 bps to 3.97%
- 5-yr: +5 bps to 3.72%
- 10-yr: +3 bps to 3.60%
- 30-yr: UNCH at 3.79%
Prior auction results:
- High yield: 3.909%
- Bid-to-cover: 2.53
- Indirect bid: 67.0%
- Direct bid: 21.1%
Average results of previous 12 auctions:
- High yield: 3.705%
- Bid-to-cover: 2.60
- Indirect bid: 72.0%
- Direct bid: 17.5%
Live From the Pit
From The TradersCommunity US News Desk