Treasury 30-year auction preview: the sale is expected to see ok results
Treasury 30-year auction preview: the sale is expected to see ok results thanks to the steepening trend heading into the bid deadline. The 5s-30s gap has widened a bit to 121 bps, the largest gap in three weeks. But the wi trades at 2.475%, 2 bps richer on the day, and would be the third lowest award of the year. Buying is hence likely to be cautious, as was the case in the prior 3- and 10-year offerings. The 10.0% dive in Chinese exports revived growth worries, which in turn boosted demand for the safety of Treasuries, and that may extend to the auction this afternoon. A slip in economic activity could also temper inflation fears which should also benefit the sale at the margin. Yet, investors will also have to gauge the likelihood that rates will continue northward. The results of the $12 B September reopening were below average. The bond was awarded at 2.475% and garnered a 2.13 cover (2.32 average) and a 57.9% indirect bid (61.1% average).