Stellar 20Y Auction Stops Through, Prices With Highest Bid to Cover On Record

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by Tyler Durden
Wednesday, Jun 21, 2023 - 05:18 PM

An otherwise boring day in which everyone pretends to be listening to Powell but is really playing wordle was broken up momentarily by some bond market action when 1 minute after 1pm ET, the Treasury announced results from today's 19-Year 11-Month reopening auction of 20Y paper, which saw nothing less than stellar demand.

Stopping at a high yield of 4.010%, this was a 6bps increase compared to May and the first 4-handle auction since November; more notably, it stopped through the 4.028% When Issued, a 1.8bps stop through, which was the highest since January.

The bid to cover was even more impressive: printing at 2.87, it was more than 30bps higher compared to May and was also the highest on record since the return of the 20Y tenor after it was put on hiatus in 1986.

The internals were also stellar, with Indirects taking down 74.6%, the most since February and one of the highest on record; and with Directs taking down 17.6%, this left Dealers holdings just 7.8% of the auction, well below the recent average of 9.8% and the lowest since February.

Overall, this was a remarkably strong auction and the market reflected this, with yields sliding in the moments following the results.