WI level was at 1.050% just before the auction
- high yield for $17 billion of 20 year bonds comes in at 1.059%. That was 0.9 basis points above the WI level just prior to the auction.
- Bid /cover ratio comes in at 2.43x vs. 2.63x at the last auction.
- Dealers took 21.2% vs. 21.9% at the last auction
- Directs were 11.8% vs. 16.5% at the last auction
- Indirects were 67.0% vs. 61.6% of the last auction
The 20 year note is a new issue by the treasury in response to the increasing debt and the historically low interest rates. The 1st auction was in May where the yield came in at 1.22%. The 2nd was in June where the yield came in at 1.314%. This month's yield is much lower at 1.059%.
Although the US deficits continue to grow, the demand for US treasuries still make borrowing attractive. The risk is that at some point there could be less demand for US debt as the deficit increases at an alarming pace. This may lead to higher interest rates.
However I'm sure the treasury is not all concerned with a 0.9 basis point tail nor a 2.43x bid to cover ratio.
The bid to cover ratio as a measure of demand. With $17 billion auctioned, the total amount of bids for that auction was 2.43 times the $17 billion.
