Imrpessive Demand For First 20Y Auction In 34 Years Pushes Yields Lower
In our preview of today's first 20-Year Treasury auction since 1986, we said it was a parade of "20s": 20 Year bond, issued on May 20, selling $20BN in debt. The only unknown was whether the auction would also price at 1.20%. It was this close.
Moments ago the Treasury announced the results of the first 20Y auction (Cusip 912810SR0) result in 34 years, and it priced at a yield of 1.22%...
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... tailing the When Issued 1.213% by 0.7bps, and wide of a straight-line interpolation of where it should have priced.
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The auction metrics are as follows:
- Bid to Cover: 2.53x
- Indirects: 60.7%
- Directs: 14.7%
- Dealers: 24.6%
Of course, since there is no recent history to compare today's auction to, we can do a simple average of the most recent 10 and 30Y auctions and find that today's auction was better across most categories:
- Bid to Cover: 2.37x
- Indirects: 60%
- Directs: 15%
- Dealers 25%
In kneejerk reaction to the solid demand for today's paper, the 10Y yield slumped to session lows as the entire curve was bought, with traders clearly happy with the result.
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