Wednesday, November 10, 2010

30-Year Treasury Bond Auction Today

was what the stock market had been waiting anxiously today. The results are in, and they are rather ugly.

Amount auctioned: $16 billion, original issue.
Primary Dealer: $8.11 billion (50.7%)
Direct Bidder: $1.72 billion (10.8%)
Indirect Bidder: $6.13 billion (38.35%)
Bid to Cover Ratio: 2.31 (last month: 2.49; last original issue in August: 2.77)
Interest Rate: 4.250% (last original issue in August: 3.875%)
High Yield: 4.320% (allotted at high: 82.04%) (last month high yield: 3.852%)

The market reaction? Non-event. The 30-year bond yield spiked RIGHT BEFORE the release of the result (I was waiting at the Treasury's website), but it soon backed down to what it had been trading, as you can see in the chart of TYX (30-year bond rate) below:

Someone made a good money in a matter of 15 minutes or so...


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