U.S. Treasury auctioned calendar for the week concludes with the granddaddy of them all

The U.S. Treasury will will auction off $24 billion of 30 year bonds at the top of the hour. The 30 year issue is the longest of the treasury issues. It's the granddaddy of them all.

The six month averages of the major components shows:

  • Bid to cover, 2.28X
  • Directs (a measure of domestic demand), 19.2%
  • Indirects (a measure of international demand), 61.2%
  • Dealers, 19.2%

Recall from last month, the 10 year note auction was stellar with a large bid to cover, very strong international demand and a negative tail (-3.1 basis points).

The 30 year auction, however, was a disappointment with a +1.0 basis point tail vs the WI level at the time of the auction.

Fast forward to the 10 year auction yesterday, the demand was not as strong as last month, but the auction still had a negative tail of -1.4 basis points with strong international demand.

Will today's auction disappoint like last months?

The sweet spot for international investors does seem to be the 10 year sector. There is less supply farther out the curve which may lead to that demand in that specific US issue.

The yield is higher further out to 30 years, but is the demand there?