Today’s $21 bln 30-yr bond auction did not go well in direct comparison to yesterday’s A rated 10-yr auction the desk gave today’s an F. We saw weak demand, which ran counter to yesterday’s very strong 10-yr note auction. The sale today sent Treasury yields higher and well off their overnight lows. Yields across the curve spiked after the high-yield at auction (3.686%) tailed the when-issued yield by more than three basis points on weak dollar demand seen in a 2.25 bid-to-cover ratio that trailed the prior 12-auction average of 2.39. Treasury yields settled at their highs for the day.
The U.S. Dollar Index (-0.2% to 103.21), which was down as much as 0.7% in early action, recovered much of the ground it lost as Treasury yields moved higher.
The bid-to-cover ratio of 2.25x was below average 2.37x, indirect takedown was 65.2% vs 69.7% average. The desk gave a F rating on the auction.
Auction Highlights
- Duration: 30 Years
- Amount: $21 billion
- High yield 3.686%
- WI level at time of auction 3.654%
- Tail -3.3 basis points
- Bid-Cover Ratio: 2.25X vs six-month average of 2.37X
- Direct Accepted: 18.9% vs six-month average of 19.0%
- Indirect Accepted: 65.2% vs. six-month average of 69.7
- Dealers 15.84% vs six-month average of 11.3%
Auction grade: F
Yields after the auction
- 2-yr: +7 bps to 4.52%
- 3-yr: +8 bps to 4.18%
- 5-yr: +6 bps to 3.88%
- 10-yr: +2 bps to 3.67%
- 30-yr: +2 bps to 3.73%
Prior auction results:
- High yield: 3.585%
- Bid-to-cover: 2.45x
- Indirect bid: 74.6%
- Direct bid: 16.3%
Yields ahead of the auction.
- 2-yr: +1 bp to 4.46%
- 3-yr: unch at 4.10%
- 5-yr: -2 bps to 3.80%
- 10-yr: -6 bps to 3.59%
- 30-yr: -6 bps to 3.65%
Average results of previous 12 auctions:
- High yield: 3.292%
- Bid-to-cover: 2.39
- Indirect bid: 69.8%
- Direct bid: 18.0%
This week’s Bond Auctions:
Live From the Pit
From The TradersCommunity US News Desk