While yesterday's 10Y auction was a stellar response to the woeful July showing, today's 30Y left a little to be desired. While today's issue of $15 billion in 30Y paper did print at a high yield of 2.274%, or stopping through the 2.277% by 3 bps, the internals were less favorable.
The Bid to Cover of 2.236 dipped from last month's 2.485%, and was lower than the 6M trailing average of 2.32. Perhaps the most important metric, Indirect bidders, took down 61.5%, also down from last month's 68.5%, and below the 6MMA of 62.9%. With Indirects less excited to take down ultra-dated paper, the Direct take down was modestly higher than July, coming at 10.9%, compared to 8.4% last month, leaving some 27.7% for Dealers, in line with the 6 month average, and higher than last month's 23.1%.
As Stone McCarthy puts it, "we had some concerns bout demand for the 30-year bond auction this afternoon, but it actually wound up going well. The auction stopped a hair through the 1:00 PM bid side and the bid/cover was in line with the average of the four Refunding bond auctions over the prior year. The buyside takedown figures were also good. Indirect bidders took down 61.5% of the auction, and Direct bidders took down 10.9% of the auction."
In short, a less than notable auction, and certainly weaker than yesterday's benchmark issuance, suggesting the pressure in the coming days may be toward more steepening as foreign Central Banks seem to be less excited by the longest tenor on the curve.