Treasury's $16 B bond reopening was very poorly subscribed
Treasury's $16 B bond reopening was very poorly subscribed, with no redeeming features. The auction stopped at 2.644%, tailing out from the 2.618% at the bid deadline. It is slightly cheaper than the 2.607% from the June sale (and compares to the 2.890% from the $19 B May refunding). But aside from last month's offering, this is the richest award rate since the the 2.30% from October 2016. The expensive yield and uncertainty over inflation trends likely contributed significantly to the poor demand. Bids totaled $104.7 B for a weak 2.13 cover, measurably below last month's 2.32 cover and and the 2.27 average. It's even below the 2.20 in May (with $19 B offered). Indeed, it's the weakest since the 2.06 from November 2018 ($19 B auctioned). Indirect bidders were awarded 50.0%, softer compared to June's 60.8% (60.5% May) and the 60.7% average. Direct bidders took 16.8%, slightly better than June's 15.1% and the 12.0% average. Primary dealers were awarded 33.2%, up from 24.1% last month.