U.S. Treasuries completed this week’s note auctions with a weak $35 bln 7-yr note auction. U.S. Treasuries felt some pressure after the recent completion of today’s sale which met lukewarm demand. The sale drew a high yield of 3.626%, which tailed the when-issued yield by 1.1 bps, the bid-to-cover ratio (2.39x) and indirect takedown (63.2%) were below average. Yesterday treasuries completed a $43 bln 5-yr note auction which met strong international demand. The fixed interest desk rated the auction a D.
Equities trade near their best levels of the session with the Nasdaq (+1.4%) maintaining its lead over the S&P 500 (+1.2%) with continued leadership from chipmakers. The USDJPY is near the highs of the day, up 80 pips.
- The domestic demand was above its six-month average indicative of stronger domestic demand
- International demand (indirect) was below the 12-month average
- Primary dealers were left with 15.4% versus normal around 12.8%
Auction Highlights
- Duration: 7 Years
- Amount: $35 billion
- High yield of 3.626%
- WI 3.615%
- Tail 1.1 basis points versus six-month average of -0.2 basis points
- Bid to cover 2.39X versus 12-month average of 2.52X
- Directs 21.4% versus 12-month average of 19.7%
- Indirects 63.2% versus 12-month average of 67.5%
- Dealers 15.40% versus 12-month average of 12.8%
Auction grade: D
Yields after the auction.
- 2-yr: +2 bps to 4.08%
- 3-yr: +1 bp to 3.89%
- 5-yr: +1 bp to 3.68%
- 10-yr: UNCH at 3.57%
- 30-yr: UNCH at 3.78%
Prior auction results:
- High yield: 4.062%
- Bid-to-cover: 2.49
- Indirect bid: 65.5%
- Direct bid: 20.8%
Average results of previous 12 auctions:
- High yield: 3.387%
- Bid-to-cover: 2.52
- Indirect bid: 67.5%
- Direct bid: 19.7%
Live From the Pit
From The TradersCommunity US News Desk