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Tailing, Poor 30Y Auction Concludes This Week’s Treasury Issuance

Concluding this week’s series of lousy Treasury auctions was today’s reopening of $12 billion in 29-Year-11-month Bonds due August 2047, which priced in line with the previous poor 3Y and 10Y auctions, printing at a high yield of 2.790%, a tail of 0.3bps to the 2.787% When Issued, and the lowest yield since last October’s 2.47%.

As in the recent auctions, the internals were lackluster, with a Bid to Cover of 2.207, below last month’s 2.319%, and below the 6MMA of 2.283%. This was the lowest BTC going back to May’s 2.191%, and the lowest for a reopening since year-ago auction. Indirect bidders took down only 58.8%, a sharp drop from last month’s 66.8%, and below the 6 month average of 62.8%. Directs were awarded 6.8%, slightly above August’s 5.4%, leaving Dealer holding 34.4%, above the recent average of 30.1%, and the most since May.

Overall, a poor auction which came during a day when the long end has been pushing wider, not helped by today’s return of the Trump “tax reform” rally, or the numerous rate lock deals following this week’s surge in primary issuance. The best news for bond bulls after today is that the primary issuance week is finally over, although more pain may be in store following tomorrow’s inflation report…

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