U.S. Treasuries closed with losses across the curve after giving back their opening gains with longer tenors seeing some buying in immediate reaction to today’s $15 bln 20-yr bond sale, which met solid demand, however the post-auction bid quickly gave way to a slip to fresh lows into the close. Todays followed last weeks’ strong 3-, 10- and 30-year auctions. Today’s sale drew a high yield of 3.954%, which stopped through the when-issued yield by a basis point. The bid-to-cover ratio (2.56x vs 2.59x) and indirect takedown (70.6% vs 71.4%) were a bit below the 12-month averages.
The desk gave an C-rating on the auction. The debt ceiling overhangs with President Biden expressing confidence that a solution will be found soon while House Speaker McCarthy said that a deal could be reached by Sunday.
Today’s $15 bln 20-yr bond stopped through the when-issued yield by a basis point. The desk gave a C- rating on the auction.
- The domestic demand was above its 12-month average indicative of stronger domestic demand
- International demand (indirect) was below the 12-month average
- Primary dealers were left with just over than 10% versus normal around 9.5%
Auction Highlights
- Duration: 20 Years
- Amount: $12 billion
- High yield 3.954%
- WI 3.964%
- Stopped Through +1.0 basis points vs. six-month average of -1.3 basis points
- Bid to cover 2.56X vs. 12-month average of 2.59X
- Directs 18.1% vs. 12-month average of 17.8%
- Indirects 70.6% vs 12-month average is 71.4%
- Dealers 11.3% vs 6 -month average of 9.5%
Auction grade: C-
Yields after the auction
- 2-yr: +9 bps to 4.16%
- 3-yr: +9 bps to 3.82%
- 5-yr: +7 bps to 3.59%
- 10-yr: +3 bps to 3.58%
- 30-yr: +1 bp to 3.88%
Prior auction results:
- High yield: 3.920%
- Bid-to-cover: 2.66
- Indirect bid: 68.7%
- Direct bid: 19.2%
Average results of previous 12 auctions:
- High yield: 3.774%
- Bid-to-cover: 2.59
- Indirect bid: 71.4%
- Direct bid: 17.8%
Live From the Pit
From The TradersCommunity US News Desk