U.S. Treasuries were in the red in response to the completion of the $14 billion 20-year Treasury bond reopening, which was met with lukewarm domestic demand. The high yield tailed the when-issued yield by 2.5 bps with the bid-to-cover ratio well above average. The weak auction helped drive the 30-yr bond back to its low. The desk gave an C rating on the auction. The S&P 500 and Nasdaq 100 are in the upper range for the week ahead of FOMC Minutes.
Today’s $15 bln 20-yr bond -2.5 basis point indicative of strong international demand. The desk gave an A rating on the auction.
- The domestic demand was below its six-month average indicative of softer domestic demand
- International demand (indirect) was also comfortably above the six-month average
- Primary dealers were left with just over than 10% versus normal around 14.3%
Auction Highlights
- Duration: 20 Years
- Amount: $15 billion
- High yield 3.380%
- WI level 3.355%
- Tail -2.5 basis points. The 6-month averages -0.6 basis points
- Bid to cover 2.30X vs. six-month average of 2.64X
- Dealers 14.7% vs. six-month average of 12.4%
- Directs 18.3% vs. six-month average of 18.0%
- Indirects 67% vs. six-month average of 67.8%
Auction grade: C
Yields after the auction
- 2-yr: +3 bps to 3.27%
- 3-yr: +8 bps to 3.28%
- 5-yr: +9 bps to 3.05%
- 10-yr: +7 bps to 2.89%
- 30-yr: +3 bps to 3.15%
Prior auction results:
- High yield: 3.42%
- Bid-to-cover: 2.65
- Indirect bid: 78%
- Direct bid: 14.1%
Average results of previous 12 auctions:
- High yield: 2.462%
- Bid-to-cover: 2.48
- Indirect bid: 66.5%
- Direct bid: 18.0%
Live From the Pit
From The TradersCommunity US News Desk