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Dismal 30Y Auction Tails Amid Lowest Demand For The Year


Dismal 30Y Auction Tails Amid Lowest Demand For The Year

One day after the ugliest 10Y auction since 2016 (which however saw a blowout in yields ahead of the 1pm deadline) moments ago the Treasury sold the last coupon bond of the week ahead of tomorrow’s FOMC meeting when it found buyers for $18BN in 30Y paper (technically 29-Year 11-month reopening of Cusip TL2). In a nutshell, the auction was almost as ugly as the 10Y even though yields tumbled this morning after the far weaker than expected CPI print.

Pricing at a high yield of 3.513%, the auction tailed the 3.482% When Issued by 3.1bps, the biggest tail since December 2021.

The bid to cover tumbled to 2.249 from 2.422, the lowest since Dec 21 and a far cry from the 2.387 six-auction average.

The internals were even more dismal, with Indirects taking down just 61.6% which was also the lowest since Dec 2021. And with Directs jumping to 23.1% from 20.4% – the highest since 2014 – it meant Dealers were left holding just 15.33% (which was an increase from last month’s 9.7%).

In response to the ugly auction, yields jumped although they are still down materially from pre-CPI levels.

Tyler Durden
Tue, 12/13/2022 – 13:26

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