Stellar 20Y Auction Thanks To Second Highest Indirects On Record

Stellar 20Y Auction Thanks To Second Highest Indirects On Record

With Treasury yields resuming their slide this week on the back of Monday’s sharp risk-off sentiment, and today’s surprise reversal which sent yields back to unchanged even as stocks rebounded, there were some concerns today’s 20Y auction (technically a 19-year-11-month reopening) would face some demand challenges. It did not, and in fact demand for today’s $24 billion offering was one of the strongest since this auction was introduced last May.

Starting at the top, the high yield of 1.795% stopped through the When Issued 1.797% by 0.2bps. It was the lowest yield for the tenor since January’s 1.643%, and well below last month’s 1.850%.

The bid to cover of 2.36 was slightly below last month’s 2.44, and just below the recent, six-auction average of 2.39.

The internals were more solid, with Indirects at 64.2% taking down the most since July 2020 and the second highest on record. Directs took down 18.9%, or in line with the recent average of 19.1% leaving Dealers holding 16.9%.

Overall, a remarkably solid 20Y auction made possible by near-record foreign demand, and indicates that nobody is worried about any hawkish surprises out of the Fed tomorrow.

 

Tyler Durden
Tue, 09/21/2021 – 13:18

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