Record Low Dealers In Stellar, Stopping Through 3Y Treasury Auction

Record Low Dealers In Stellar, Stopping Through 3Y Treasury Auction

In the week’s first refunding auction, moments ago the Treasury sold $42 billion in 3 year paper in a strong auction.

The high yield of 3.202% was above last month’s 3.093% and the highest since 2007; it also stopped through the When Issued 3.205% by 0.3bps, just below last month’s stop through of 0.5bps.

The bid to cover of 2.501 was the highest since May’s 2.595 and above the 6-auction average of 2.467.

The internals were also solid with Indirects awarded 63.1% of the auction, the highest since February, and obviously well above the six-auction average of 58.5. And with Directs awarded just 17.3%, or the lowest since February, it meant that Dealers were left holding to 19.6% of the auction, the lowest on record, and to be expected at a time when the Fed is not only no longer buying bonds via QE but is actively unwinding its balance sheet.

Overall this was a solid start to the TSY’s refunding auctions week, and while the 3Y yield was a new post-Lehman high, expect to see both the 10Y and 30Y later this week continue to sink lower.

Tyler Durden
Tue, 08/09/2022 – 13:23

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