Today’s USD 22bln 30-year bond auction will be watched closely after the prior sale stopped at a high yield of 4.871%, which was above the six-auction average of 4.745%. The last auction showed a tail of -0.7bps, better than the -0.3bps six-auction average, while the bid-to-cover came in at 2.45x, a touch above the 2.42x average, pointing to solid overall demand.
Looking at the breakdown, dealers took 9.4% versus the 9.9% average, suggesting they were left with slightly less than normal. Direct bidders were awarded 27.2%, above the 24.0% average, while indirect bidders took 63.4%, below the 66.0% average. That mix suggests domestic demand was a bit firmer, while foreign participation was a touch softer than usual.
The 3 and 10 year auctions on Tuesday and Wednesday was met with modest to average demand. Will buyers show up for the longest maturity?
Auction history
- High Yield: Six-auction avg. 4.745%
- Tail: Six-auction avg. -0.3bps
- Bid-to-Cover: Six-auction avg. 2.42x
- Dealers: Six-auction avg. 9.9%
- Directs: Six-auction avg. 24.0%
- Indirects: Six-auction avg. 66.0%
As we head into the auction, the US yields are lower on the day with the two-year down 3 point basis points or 3.756%. The 10 year is down -2.5 basis points at 4.267%, and the 30 year is down 1.3 basis points at 4.873%.
Looking at the US equities, the Dow industrial average is up 0.57%, the S&P is up 0.51% and the NASDAQ index is up 0.61%.
Crude oil is trading up $3 and $97.37. Gold is up $71 at 4007 or $90 and silver is up near $2 and $76.10.
