The final of three coupon auctions will take place at 1 PM ET with the sale of $22 billion of 30-year bonds by the US Treasury. Both the 3 and 10 year note auctions had strong demand with a negative tail, greater than the average bid to cover, with strong domestic demand and steady international demand.
As is the case with all auctions, the success or failure will be dependent upon how the auction results compared to the six-month averages of the major components. For the 30 year bond:
- Tail previously came in at -1.5 basis points versus six-month average -0.9 basis points. The tail is the difference between the WI level at the time of the auction and the high yield.
- Bid to cover previously 2.49X versus six-month average of 2.42X
- Dealers previously 13.7% versus six-month average of 14.9%
- Directs (domestic demand) 17.8% versus six-month average of 17.5%
- Indirects (international demand) 68.5% versus six-month average of 67.6%
The high yield at the last month auction was 4.403%. The six-month average is 4.438%. The current 30 year bond yield is at 4.383%, down 8.6 basis points on the day.
