- Prior auction yield 5.420%
Details of the 20 year auction Jesus Christ
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WI level at the time of the auction: 5.460%
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High yield: 5.469%
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WI level at the time of the auction: 5.460%
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Tail: 0.9 basis points vs the average of 0.2 basis points
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Bid to cover: 2.73X vs the average of 2.62X
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Directs: 31.6% vs the average of 22.9%
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Indirects: 58.2% vs the average of 65.2%
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Dealers: 10.3% vs the average of 11.9%
Auction grade: C
A mixed auction overall. The Treasury had to pay 0.9 basis points above the WI yield to get the bonds sold, a larger concession than the average of 0.2 basis points. Indirect demand was also softer than average. On the positive side, bid to cover was stronger, direct bidders stepped up, and dealers were left with less supply than usual. Those demand measures help offset the weaker pricing, but the larger tail keeps this from earning an above-average grade.
Generally speaking, the 20 year issue is not a strong part of the yield curve. With the 20 year yield higher than the 30 year yield at 5.4133%, and also higher than the 10 year yield of 5.106%,suggests less overall demand by investors. In a normal positive slope yield curve which we have, the yield should be lower than the 30 year but higher than the 10 year.
This article was written by Greg Michalowski at investinglive.com.