US Treasuries sold off after the completion of today’s $32 billion 10-yr note reopening, which met weaker demand than yesterday’s 3-yr note sale. Today’s reopening drew a high yield of 3.455%, tailing the when-issued yield by two basis points. The bid-to-cover ratio (2.36x) was just below average (2.42x) while indirect takedown (63.0%) was also below average (64.9%). Notably yesterday’s $40 bln 3-yr note sale found stronger interest, the shorter date in line with the bond market risk profile. The desk gave a D rating on the auction.
Earlier today we heard annual inflation cooled for the eighth straight month on a year-over-year basis, total CPI was up 5.0%, versus up 6.0% in February. However, core-CPI was up 5.6% year-over-year, versus up 5.5% in February.
The bid to cover 2.36X vs. 12-month average of 2.42X, indirect takedown 62.3% versus 12-month average of 64.9%. The desk gave a D rating on the auction.
Auction Highlights
- Duration: 10 Years
- Amount: $32 billion
- High yield: 3.455%
- When-Issued level at the time of the auction 3.435%
- Tail 2.0 basis points versus six-month average of 0.1 basis points
- Bid to cover 2.36X vs 12-month average of 2.42X
- Directs 19.9% vs 12-month average of 18.3%
- Indirects 62.3% versus 12-month average of 64.9%
- Dealers 17.1% versus 12-month average of 16.8%
Auction grade: D-
Yields after the auction
- 2-yr: -3 bps to 4.02%
- 3-yr: -7 bps to 3.75%
- 5-yr: -3 bps to 3.53%
- 10-yr: +2 bps to 3.45%
- 30-yr: +6 bps to 3.68%
Average results of previous 12 auctions:
- High yield: 3.384%
- Bid-to-cover: 2.42
- Indirect bid: 64.9%
- Direct bid: 18.3%
Prior auction results:
- High yield: 3.985%
- Bid-to-cover: 2.35
- Indirect bid: 62.3%
- Direct bid: 20.0%
- 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