Mediocre 20Y Auction Sees Steep Drop In Foreign Demand
With auction after auction printing at the highest yields in decades, today’s sale of $13BN in 20Y notes was no different, only today’s high yield of 4.592% was the highest on record (or at least since the auction was reintroduced after it was phased out in 1986). Naturally, it was higher than last month’s 4.499% but signaling overall bond market strength, perhaps as a result of the dump in stocks, stopped through the 4.595% When Issued by 0.3bps, the first non-tailing 20Y auction since June.
The bid to cover of 2.74 was also solid, coming above the six-auction average of 2.64 and was the highest since June’s 2.87.
The internals were a bit softer, with Indirects taking down 65.4%, below last month’s 68.4% and below the recent average of 69.7%. And with Directs taking down 25.4%, or the most since March 2022, Dealers were awarded 9.3%, the lowest since June.
Overall, this was a good, if not great 20Y auction, one which did little to fix the kink in the curve that has the 20Y yield printing well above both the 10Y and the 30Y.
Tue, 09/19/2023 – 13:26