A 0.9 Basis Point Tail on Better-Than-Average Demand, at a Yield Above the 30-Year
The Treasury reopened $13bn of twenty-year bonds at 17:00 UTC and the result points two ways at once.
Bid-to-cover came in at 2.73 against a six-auction average of 2.62 and 2.57 last month; primary dealers took 10.3 per cent against an 11.9 average and 16.9 previously; direct bidders 31.6 against 22.9. Three of four demand measures beat the average. It still tailed: high yield 5.469 per cent against a when-issued level of 5.460, which is 0.9 of a basis point of stop-through, 4.5 times the 0.2 basis point average and less than half last month's 2.0. So the concession shrank by more than half while the clearing yield rose 4.9 basis points - the same merge of demand with price that this desk flagged on the Japanese twenty-year two days ago, with the sign backwards in both hemispheres. It is also the first auction we can call a tail using the when-issued subtraction our own rulebook demands, which closes a refusal we published on Tuesday. The number worth carrying is neither: at 5.469 per cent the twenty-year cleared 5.6 basis points above the thirty-year at 5.4133 and 32.4 above the ten-year close of 5.145, so the government paid more to borrow for twenty years than for thirty. One publisher grades the auction C, a second calls it in line with no directional read, a third publishes the table with no verdict. The issuer's own result was not read and the when-issued level is single-sourced.