The U.S. Treasury will auction off $13 billion of 20 year bonds at 1 PM ET. The six-month averages of the major components will be compared to the actual results to determine success or failure of the auction:
- Tail (the difference between the WI level at the time of the auction and the high yield): +0.1 basis points
- Bid to cover: 2.60X
- Directs (a measure of domestic demand): 18.9%
- Indirects (a measure of international demand) 67.8%
- Dealers: 13.3%
last week the treasury auctioned off 3, 10, and 30 year coupon issues. The three year note option was met with tepid demand but the 10 and 30 year auctions were solid (grades of A-) propelled by strong international demand.
Yields are lower today after weaker retail sales. The current 20 year yield is at 4.471%, down -4.8 basis points. At the last auction last month the high yield came in at 4.635%. So yields are down a good 17 basis points since last month which can make the auction a little bit more difficult. The tail last month was -0.2 basis points with the bid to cover of 2.51X.