U.S. Treasuries trading to new lows after the U.S. Treasury completed this week’s note and bond auction offerings with a $20 bln 30-yr bond reopening, which met soft demand. The sale drew a high yield of 4.837%, which tailed the when-issued yield by 3.7 bps. The bid-to-cover ratio (2.35x) was below the prior 12-auction average (2.39x), as was indirect takedown (65.1% vs. 68.9%), below-average foreign demand. The post-auction selling, has been paced by the long end, has resulted in some pressure on equities, sending the S&P 500 (-0.4%) to a fresh low for the day. The Fixed Interest desk rated it a D- after this week’s completed $35 bln 10-yr note sale and $44 bln 3-yr note sale.
The bid-to-cover ratio of 2.35X vs 2.39X 12-month average, indirect takedown was 65.1% vs 68.9% 12-month average. The desk gave a D- rating on the auction.
Auction Highlights
- Duration: 30 Years
- Amount: $20 billion
- High yield 4.837%
- WI level at time of auction (When-Issued: 4.800%)
- Tailed when-issued yield by 1.4 bps
- Bid to cover 2.35X vs 2.39X 12-month average
- Directs (a measure of domestic demand) 16.7% vs 19.3% 12-month average
- Indirect (a measure of international demand) 65.1% vs 68.9% 12-month average
- Dealers (they take the rest) 18.20% vs. 11.8% 12-month average
Auction grade: D–
Yields after the auction.
- 2-yr: -3 bps to 4.97%
- 3-yr: -4 bps to 4.64%
- 5-yr: -2 bps to 4.39%
- 10-yr: -1 bp to 4.26%
- 30-yr: UNCH at 4.35%
The Auction came after the August CPI release for the U.S.
Yields ahead of the auction.
- 2-yr: +5 bps to 5.05%
- 3-yr: +6 bps to 4.83%
- 5-yr: +7 bps to 4.67%
- 10-yr: +5 bps to 4.65%
- 30-yr: +4 bps to 4.78%
Prior auction results:
- High yield: 4.345%
- Bid-to-cover: 2.46
- Indirect bid: 64.5%
- Direct bid: 19.7%
Average results of previous 12 auctions:
- High yield: 3.869%
- Bid-to-cover: 2.39
- Indirect bid: 68.9%
- Direct bid: 19.3%
This Week’s Other Treasury Auctions
Live From the Pit
From The TradersCommunity US News Desk