The $22 billion 30-year US Treasury auction concluded with weaker-than-anticipated demand, with the awarded yield coming in at 5.020%. This figure is higher than the pre-auction yield of 5.008% observed at the 1 p.m. New York deadline for bids.
Upon the release of the auction results, the yield on this maturity initially fell by approximately 2 basis points from the previous day's level before making a modest recovery. The yield on the already-traded 30-year Treasury subsequently climbed back above 5.01%, remaining about 1.7 basis points lower than the prior day's close. Meanwhile, the spread between 5-year and 30-year Treasuries gave back the narrowing it had achieved earlier in the day.
Primary dealers were allocated 14.7% of the auction, marking their highest share since August of last year. The proportion awarded to indirect bidders fell to 60%, which offset the impact of direct bidders receiving an increased allocation of 25.3%.
The bid-to-cover ratio for the sale was 2.33, coming in below the average of 2.40 seen over the past six auctions.
This auction had the potential to benefit from the attractive yield level near 5% and speculative short positions in the futures market. However, these positive factors were counterbalanced by the recent strong performance of Treasuries and a lack of discount on the day of the auction itself.
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