Treasury 10-year auction preview: the $20 B reopening should be decent
Treasury 10-year auction preview: the $20 B reopening should be decent, though nothing stellar. The wi is 1.5 bps lower at 2.350%. That's 17 bps cheaper than the 2.18% award from September, where the rather rich pricing made for soft results. However, a stop at the current level would only be the highest since May, and that may not be enough to compensate for the Fed's normalization course and the potential for a pick up in inflation. The note is not that attractive on the curve, trading at an 82 bp premium to the 2-year. That's on the narrow side of the curve over the past two weeks, though in line with the spread between August 24 and September 24. Meanwhile, the spread to the German 10-year is 188 bps, which is at the narrow end for the week, but at the wider end of the gap since early July. So, the indirect bid should be ok. The $20 B September 10-year reopening stopped at 2.180% and saw a 2.28 cover (2.41 average) and a 55.3% indirect bid (62.0% average). Direct bidders accepted 6.0%, while primary dealers were awarded 38.7%.