Ugly 30Y Auction Prices With Biggest Tail Since August

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by Tyler Durden
Tuesday, Jul 13, 2021 - 01:12 PM

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.