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Subpar, Tailing 3Y Auction Sends Yields To Session High Ahead Of 10Y Treasury Sale

Subpar, Tailing 3Y Auction Sends Yields To Session High Ahead Of 10Y Treasury Sale

After a nearly 3 week hiatus from Treasury auctions with the last coupon sale taking place on June 24, a silent period some said was among the causes for the recent drop in treasury yields, moments ago the Treasury came back to the market with a bang in the first of the day’s two coupon auctions when it sold  $58 billion in 3Y Treasurys, 90 minutes ahead of the day’s next sale when at 1PM the Treasury will sell $38bn in a 10Y reopening.

So how did the market digest the first coupon auction in 18 days? Well, it was subpar at best, printing at a high yield of 0.426%, the highest since March 2020 and tailing the When Issued 0.424% by 0.2bps.

The Bid to Cover was 2.411, below June’s 2.467, the lowest since April and well below the 2.468 six-auction average.

The internals were somewhat better, with Indirects taking down 52.3%, down from 54.2% last month but the second highest since October and comfortably above the 51.3 recent average. And with Directs taking down 18.3% of the auction, which was above the 16.8% six auction average, Dealers were left holding 28.6% of the final allotment, modestly below the average of 31.9%.

Overall, a slightly subpar auction, and one which pushed 10Y yields to session highs of 1.3678% – nearly 12 bps higher than last week’s low of 1.25%, ahead of today’s 10Y auction.

 

Tyler Durden
Mon, 07/12/2021 – 11:48

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