U.S. Treasuries were on the lows ahead of the completion of the $12 billion 20-year Treasury bond reopening, which was met with lukewarm domestic demand. The high yield tailed the when-issued yield by 1.3 bps with the bid-to-cover ratio 2.65x. The weak auction helped drive the 30-yr bond back to its low. The desk gave an B rating on the auction. The S&P 500 and Nasdaq 100 are near the low for the week ahead of FOMC Minutes.
Today’s $12 bln 20-yr bond -1.2 basis point indicative of strong international demand and soft. The desk gave an B 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: $12 billion
- High yield 3.820%
- WI 3.833%
- Tail -1.3 BPs. Six-month average of -1.2 basis points
- bid to cover 2.65x vs six-month average of 2.65X
- dealers 8.1% vs. six-month average 11.1%
- Direct 16.6% vs. six-month average of 18.5%
- Indirects 75.3% vs. six-month average of 70.4%
Auction grade: B
Yields after the auction
- 2-yr: +4 bps to 3.98%
- 3-yr: +6 bps to 3.95%
- 5-yr: +6 bps to 3.75%
- 10-yr: +9 bps to 3.58%
- 30-yr: +9 bps to 3.60%
Prior auction results:
- High yield: 3.380%
- Bid-to-cover: 2.30
- Indirect bid: 67.0%
- Direct bid: 18.3%
Average results of previous 12 auctions:
- High yield: 2.586%
- Bid-to-cover: 2.48
- Indirect bid: 67.0%
- Direct bid: 17.0%
Live From the Pit
From The TradersCommunity US News Desk