Treasury 30-year auction outlook: the $13 B bond sale should be uneventful
Treasury 30-year auction outlook: the $13 B bond sale should be uneventful. Results should be about average after similar results in yesterday's 3- and 10-year sales, and given the tame inflation report that won't raise any hackles on the FOMC. However, the lack of concession and the 2.5 bp drop to 3.110% in the when issued is a marginal negative. While a stop here would be modestly richer than the 3.121% award rate in February; but excluding that, this would be the cheapest since last March's 3.170%. It also offers a 185 bp yield pick-up versus the German equivalent. There may be something of a safe-haven bid too on the Tillerson news. The bond isn't tight in repo, while the JPMorgan "all client" survey showed an increase in both longs and shorts and a concomitant drop in neutrals. The bond also has some natural buyers. Nevertheless, the $1 B increase in auction size versus the prior reopening, and expectations for additional increases across the maturity spectrums, may limit demand. The $16 B February new issue stopped at 3.121% and saw a 2.26 cover (2.34 average) and a 61.2% indirect (62.9% average).