The US Treasury 10-Year Bond Sale performed worse than expected following the hot April CPI number released earlier in the day, garnering a D+ rating across the Fixed Interest desk with strong demand from the international market. However, the tail was -1.4 basis points with WI level at time of the auction 2.929% and the high yield of 2.943% at the auction. Soft demand after yesterday’s $50 billion 3-yr note sale. The post-auction selling was heaviest in the long bond as shorter tenors remain near their best levels of the day.
The bid-to-cover ratio of 2.43x was below average 2.52x, as was indirect takedown 64.3% vs 65.5% average. The desk gave an F rating on the auction.
Auction Highlights
- Duration: 10 Years
- Amount: $36 billion
- High yield 2.720% (prev 1.920%) (When-Issued: 2.690%)
- WI level at time of auction 2.690%
- Tail -3.0 basis points
- Bid to cover 2.49 versus six-month average of 2.48X
- Directs 18.21% vs six-month average of 16.6%
- Indirects 70.3% vs six-month average of 69.2%
- Dealers 11.49% vs six-month average of 14.2%.
Auction grade: C-
Yields prior the auction
- 2-yr: +7 bps to 2.70%
- 3-yr: +6 bps to 2.89%
- 5-yr: +6 bps to 2.97%
- 10-yr: +2 bps to 3.02%
- 30-yr: +3 bps to 3.16%
Average results of previous 12 auctions: High yield: 2.005%
- High yield: 1.670%
- Bid-to-cover: 2.51
- Indirect bid: 68.9%
- Direct bid: 16.7%
- 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