Ugly 30Y Auction Prices With Biggest Tail Since August

Ugly 30Y Auction Prices With Biggest Tail Since August

After two mediocre coupon auctions were staggered on Monday ahead of today’s sale of 30Y paper in the form of a 29-Y 10-Month reopening, the bond market seemed content that there would be no fireworks. Alas, the bond market was wrong again, because moments ago the Treasury sold $24BN in what can only be called an ugly auction, if nowhere near as ugly as the infamous February 7Y auction.

With the When Issued trading at 1.976%, the market was expecting the first sub-2% high yield since February. It wouldn’t get it because the auction priced at exactly 2.000%, tailing the When Issued by 2.4bps, the biggest tail since last August.

The Bid to Cover of 2.193 was also quite ugly, down from 2.29% last month and the lowest since February. It was also below the six-auction average of 2.32.

The internals likewise were disappointing, with Indirects taking down 61.1%, down from 64.0% in June and below the 62.4% average. And with Directs taking down just 16.6%, the lowest since November, Dealers were left with 22.3% of the allotment, the most since October.

Overall, this was one ugly auction and one which pushed 10Y yields higher by 2bps and the 30Y yield near session highs.

Tyler Durden
Tue, 07/13/2021 – 13:12

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