The U.S. Treasury’s sale of $19 billion of 30-year bonds on Thursday was healthy enough, though it showed some reluctance among investors to accept ultra-low yields on their ultra-long bonds.
The auction drew a yield of 2.335%, the lowest since 2016 for this maturity, but it was a little more than a basis point above the market rate at the time. This sign of weaker demand followed a similar scenario for Wednesday’s 10-year auction, which produced a tail -- as this gap is called -- of 1.7 basis points.
The auction statistics were otherwise solid, as the bid-to-cover ratio of 2.24 was in line with the average for the previous six refunding auctions. Primary dealers, who are obliged to bid at Treasury auctions, were left with just 26.1%. That’s the lowest share ever for a refunding auction.
And take-up was stronger than usual among indirect bidders, a class of investors that includes pensions and mutual funds. They purchased 61.3%, compared with the average of 60.4%.
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