Treasury 30-year auction preview:
Treasury 30-year auction preview: the $16 B reopening completes this week's $78 B in coupon offerings. The prior two auctions, the 3- and 10-year sales, were lackluster amid rich yield levels. That could be the case again today with the ECB inspired rally in bonds. The when issued 30-year dropped almost 8 bps lower at 2.139%, but it's bounced to 2.190%. And a stop there will be just off the record low of 2.172% from July 2016, although the coupon will remain at 2.25%, so it could be a decent buy if one expects rates to remain low. The bond also offers a big yield pick-up to overseas bonds, with the German 30-year in negative territory and provides a 228 bp yield premium. Inflation still looks fairly benign, even with the acceleration in y/y core CPI, and keeps the bond on relatively attractive footing. On the other hand, the note is not that attractive on the curve, having narrowed against the rest of the curve. Also, Treasury Secretary Mnuchin again talked about considering a 100-year bond, and though it's a modest risk, it could dilute demand marginally today. The $19 B August new issue stopped at 2.335% and garnered a 2.24 cover (2.25 average) and a 61.3% indirect bid (59.7% average), with a 12.5% direct bid (12.9% average).