After two consecutive soft auctions, in the form of Tuesday’s mediocre 3Y, and yesterday’s very disappointing 10Y reopening, moments ago the US treasury sold $13BN in another 30Y reopening, which however saw a notable pick up in buyside demand, stopping at a high yield of 3.044%, stopping through the WI of 3.045% by 0.1 basis point. This was below last month’s 3.109% high yield, and the lowest going back to January’s 2.867% as a result of the recent sharp flattening in the yield curve.
The surprisingly strong auction on a day in which the 10Y has sold off drastically had strong internals as well, with the bid-to-cover of 2.41 higher than last month’s 2.38, and just below the 2.44% 6 month average. More importantly, Indirect Bidders finally stepped up their game, and took down 61.0% of the auction, up notably from 57.9% last month, if below the 62.8% 6 month auction.And with Directs at 14.6%, virtually unchanged from last month’s 14.8%, this meant that Dealers were also awarded less, or 24.4%, compared to 27.3% last month.
Overall, a strong end to a week of otherwise very disappointing auctions, even if it remains to be seen if foreign buyers are back for good, or if today’s modest pick up was just technical.