Subpar Demand For Tailing 30Y Treasury Auction Amid Plunging Yields

Following today’s plunge in Treasury yields, some rates traders were wondering just how ugly the auction of $19BN in 30Y bonds would be. Yet even despite the dramatic tightening across the curve which has bull flattened dramatically, there was clearly enough buyside interest for today’s 29-Year 11-Month reopening of cusip SN9, which stopped at a high yield of 1.45%, a 3 month high, and also stopped through the When Issued 1.444% by 0.6bps.

Just like Tuesday’s dismal 10Y auction, the Bid to Cover slumped, if not quite as badly, dropping to 2.265 from 2.301 and the lowest since November.

The Internals were mediocre: Indirects took down 62.2%, below both May’s 65.7% and the six auction average of 64.9%. Directs took down 13.3%, also fractionally below the recent average of 15.2%, which left Dealers holding 24.5%, the highest since September.

Overall, a disappointing end to a week marked by rather subpar bond auctions although much of that can be attributed to the dramatic plunge in yields, which has seen the 10Y drop from the as high as 0.95% last week to just 0.67% right now.