Another Poor Auction: 30Y Paper Received Badly With Big Tail, Sliding Bid-To-Cover And Indirects

One day after the ugliest 10Y auction in a long time, the US sold $15 billion in 30Y paper in what was yet another "deplorable" bond auction.

The refunding stopped with a sizable tail, with the high yield printing at 3.05%, 1.3bps wide of the 3.037% When Issued, with a light bid/cover, and small buyside takedown. Indirect bidders took down 59.1% of the auction today, and Direct bidders took down 5.3% of the auction.

The high yield of 3.05% was above last month's 2.938% in April but below the 3.17% in March. It also tailed the When issued at 1pm.

The details: the bid to cover of 2.191 was the lowest since November, and below both April's 2.226 the 2.31 6 month average. Total bids of $37.8b for $20.0b in bonds sold vs $26.8b in bids for $12.1b in bonds sold at the previous

Indirect bidders took down 59.1%, which also was the lowest since November, down from 64.5% in April and below the 6 month average of 62.8%. Directs took down 5.3%, also a drop from April and below the 8.4% 6 month average.  This left Dealers with 35.6% of the final allocation, the highest going back all the way to September.

Unlike yesterday, however, when the 10Y print caused a sharp selloff across the curve, today there was some confusion in the kneejerk reaponse as shown below. That said, the curve did resume a modest steepening, although it may all be reversed tomorrow if the April retail sales disappoint again, as today's earnings report from Macy's suggest will likely be the case.


No comments yet! Be the first to add yours.