Ugly, Tailing 20Y Auction Pushes Treasury Yields To Session High
Wed, 11/18/2020 – 13:15
Now that every new Treasury auction is a record-size to keep up with the unprecedented deficit funding needs of the US, moments ago the sale of 20Y bonds continued this trend when Treasury sold $27 billion in 20Y paper, up $5 billion from October and the biggest size for this tenor in history.
What was more notable, however, than the auction’s record size was just how ugly it was: today’s sale of 20Y paper had the worst metrics since its May return from hibernation back in 1986.
First, starting at the top, the high yield of 1.422% was not only the highest in recent history, but also tailed the When Issued 1.413% by 0.9%: the most since August.
The bid to cover was even uglier, sliding from 2.43 to 2.27, also the lowest since the 20Y return 7 months ago.
Finally, the internals were mediocre with Indirects taking down 61.2%, down from 62.9% in October and below the 6-auction average of 62.6%. And with Directs taking down 15.3%, or inline with recent auctions, Dealers were left holding 23.5%, just above the recent average of 23.2%.
Overall an ugly auction, and the bond market agreed judging by the spike in 10Y yield to session highs above 0.89% after the details hit.
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