The U.S. Treasury auctioned off $16 billion of 20 year bonds.

  • High yield 2.651%
  • WI level at the time of the auction 2.665%
  • Tail -1.4 basis points
  • Bid to cover 2.72x versus six month average of 2.41x
  • Directs ( a proxy for domestic demand) 26.23% vs six month average of 18.9%
  • Indirects ( a proxy for international demand) 64.39%vs six month average of 63.2%
  • primary dealer's take 9.59% vs 17.9%

Auction Grade: A+

Highlights:

  • Tail is negative indicative of strong demand. The average is +0.8 basis points for this issue.
  • The domestic demand was well above its six month average indicative of strong demand
  • International demand (indirects) was also comfortably above the six month average
  • primary dealers are left with less than 10% versus normal around 18%

There is nothing wrong with the demand at the higher rates.

The 10 year yield is now down about -5.1 basis points while the 30 year is down -6.7 basis points.