The US treasury will auction off $21B of 30 year bonds at the top of the hour

<p>The US treasury will auction off $21B of 30 year bonds at the top of the hour. The auction is the last of the coupon auctions front-loaded ahead of the FOMC rate decision tomorrow at 2 PM. Yesterday, the treasury did double duty with the auction of 3 and 10-year issues. In the old days, the Fed would have auctions at 1 PM and announce rate decisions at 2 PM. The Treasury now avoids that risk event by front loading auctions (or they may delay an auction to Thursday as well). </p><ul><li><p>High Yield:</p><ul><li>Previous: 4.769%</li><li>Six-auction average: 4.326%</li></ul></li><li><p>Tail:</p><ul><li>Previous: 5.3 basis points (bps)</li><li>Six-auction average: 2.1 bps</li></ul></li><li><p>Bid-to-Cover Ratio:</p><ul><li>Previous: 2.24 times (x)</li><li>Six-auction average: 2.4x</li></ul></li><li><p>Dealers' Participation:</p><ul><li>Previous: 24.7%</li><li>Six-auction average: 15.2%</li></ul></li><li><p>Directs' Participation: A measure of domestic buyers</p><ul><li>Previous: 15.2%</li><li>Six-auction average: 18.3%</li></ul></li><li><p>Indirects' Participation: A measure of international buyers</p><ul><li>Previous: 60.1%</li><li>Six-auction average: 66.6%</li></ul></li></ul><p>The 3 and 10-year note auctions on Monday were sloppy with larger-than-expected tails and slack international demand. Rates have moved lower and that may have impacted some demand from some participants. Will the grand-daddy of all issues (at least the oldest) lack investor interest as well?</p><p>PS Last month the 30-year auction was met with low demand. The tail was 5.3 basis points above the WI level at the time of the auction and the Bid to cover was well short of the 6-month average. Dealers were saddled with nearly 25% of the auction. You can't get much worse than that auction, but having said that, yields are down to around 4.34% currently. Last month, the yield was higher at 4.769%.</p><p>It will be interesting to see the demand at the lower levels. </p>

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