30 Year Bond Auction Results and Market Reactions

The Treasury has successfully auctioned $16 billion 30 year bonds. This amount is unchanged from the previous refunding.

The bid to cover ratio, a measure of auction demand, was 2.60 bids submitted for every one accepted by the Treasury. This is close to recent averages for re-openings but the highest bid to cover for a re-funding since the Treasury brought back the long bond in 2006.  

Bidding stopped out at a high yield of 4.49%...which was above the 1pm "when issued" bid.

Primary Dealers, aka the street, took 45.7% of the issue.  This was below the ten auction average of 48.2% and the five auction average of 47.8%, but better than the previous refunding where dealers were awarded 47.4% of the issue. Remember we do not want primary dealers being the main source of auction demand, the more the Treasury can rely on directs and indirects---the better it is for us.

Direct bidders, aka domestic fund managers like Vanguard and PIMCO, were awarded 21.8% of the issue. While this is below the previous three auctions and the last refunding, direct buyers are still proving to be stable supporters of U.S. debt auctions.

Indirect bidders were awarded 32.5% of the auction. This is a low turnout from indirects but not terrible.  

Non-dealer accounts took down 54.3% of the auction. That is much better vs. recent averages and a sign of strong demand.

Plain and Simple: While the long bond refunding didn't go as well as the previous reopenings, it went well for a refunding. Direct bidders continue to be a massive source of support (grabbing yield!)

The market's reaction....

Stocks are off their highs of the day but interest rates are still rising.