US treasury auctions of $16B of 20 year bonds at a high yield of 4.499%

<p>The US treasury auctioned off $16B of 20 year bonds at a high yield of 4.499%. The WI level at the time of the auction was at 4.49%.</p><ul><li><p>High Yield:4.499%</p><ul><li>Previous auction: 4.036%</li><li>Six-auction average: 3.968%</li></ul></li><li>WI at the time of the auction: 4.49%</li><li><p>Tail: 0.9 basis points</p><ul><li>Previous auction: 0.1bps</li><li>Six-auction average: -0.3bps</li></ul></li><li><p>Bid-to-Cover: 2.56X</p><ul><li>Previous auction: 2.68x</li><li>Six-auction average: 2.64x</li></ul></li><li><p>Dealers (they take what domestic and international player don't take): 11.35%</p><ul><li>Previous auction: 9.6%</li><li>Six-auction average: 9.9%</li></ul></li><li><p>Directs (they represent domestic US investors): 20.2%</p><ul><li>Previous auction: 21.7%</li><li>Six-auction average: 19.3%</li></ul></li><li><p>Indirects (they represent international investors): 68.45%</p><ul><li>Previous auction: 68.8%</li><li>Six-auction average: 70.8%</li></ul></li></ul><p>Auction Grade: D</p><p>Summary: Bid to cover was lower than the 6-month average. The tail was nearly 1 BP above the WI level at the time of the auction. Both are indicative of ho-hum demand. The domestic demand was marginally above the 6-month average, but international demand (who takes the vast majority of US debt), was less than average.</p><p>Today, US yields are still sharply lower as the flash PMI data was weaker than expected, and that has traders hoping that the economy is back on a soft landing path. Time will tell. </p><ul><li> 2-year yield is at 4.946% -8.7 basis points</li><li>5-year yield is at 4.362%, -11.6 basis points</li><li>10-year yield 4.207% -12.0 basis points</li><li>30-year yield 4.307% -10.2 basis points</li></ul>

This article was written by Greg Michalowski at www.forexlive.com.