WI yield at 1.444% ahead of the auction

  • High yield 1.45% vs. 1.444% WI level
  • Bid to cover 2.3x vs six-month average 2.41x
  • Dealers take 24.5% vs. six-month average of 19.9
  • Directs 13.3% vs. 13.2 vs. six-month average of 15.2%
  • Indirects 62.2% vs. six-month average of 64.9%

A sloppy auction but the auction was into a rising market/lower yield day. The 30 year yield is currently down 6.2 basis points on the day and has been moving lower over the last few days.

Dealers were left with a higher than the average 24.5% of the auction (vs. 19.9%). The bid to cover came in lower than the six-month average of 2.41x indicative of lower investor demand.

Of course the US treasury will be upping their auction amounts as of the larger deficit. That means investors will have to pony up more funds in a low rate environment all things being equal.