Some of the component six month averages for comparison
The U.S. Treasury will auction off $41 billion a 10 year notes at the top of the hour. Yields have moved higher since bottoming near 1.13% a week or two ago. The high yield today reached 1.378% which is a pretty big bounce off that low. Nevertheless, the yield is well off the April high of 1.774%.
What are some of the benchmark six month average is for the major components of the recent auctions?
- Bid to cover, 2.42X. The bid to cover measures the number of bids versus the auction amount. A higher numbers indicative of strong demand.
- Directs, 17.8%. The percentage total of Direct bids are a proxy for domestic demand.
- Indirects, 61.5%. The percentage total of Indirect bid are a proxy for international demand which is the largest buyers of US government debt.
- Dealers, 20.7%. What is not competitively distributed to Direct and Indirect bidders goes to the US government dealers. A high percentage is indicative of low external investor demand. A low number is indicative of strong external investor demand.
The best auctions have:
- A high bid to cover
- With high direct and indirect demand and
- A low dealer number.