Treasury 30-year auction preview: the offering should go ok
Treasury 30-year auction preview: the offering should go ok, with risk of better than expected results. The lack of concession may limit the bid at the margin. The wi is 2 bps lower at 3.095%. However, it's still cheaper than the 2.958% award for the $14 B July reopening and is in line with rates for most of the year. That portends fairly average results, though the more bullish tone after the inflation data may be supportive, as well as the slightly steeper curve. The new note should also be attractive to indexed funds. It also trades with a favorable spread to foreign sovereigns, with a 275 bp pick up versus the German 30-year. The bond has been relatively tight in repo too. On the negative side, the increased auction size could dampen the cover ratio. The $14 B July reopening stopped at 2.985%, with the $17 B May refunding bond at 3.130%. Last month's sale saw a 2.34 cover, and 2.38 in May (2.39 average). Indirect bidders accepted 61.9% last month and 62.7% in May (62.5% average).