U.S. Treasury auctioned off $38 billion of 10 year notes at a high yield of 1.497%

WI level at the time of auction was 1.507%.

  • High yield 1.497%. WI level at the time of auction was 1.507%. Tale of -1 basis point
  • Bid to cover 2.58X.  Six month average 2.39X
  • Dealers 15.72%. Six month average 22.1%.
  • Indirects 65%. Six month average 60.8%
  • Directs 19.2%. Six month average 17.1%
Auction grade: A+
Nothing wrong with this auction.
  • Tailed by -1.0 basis point vs the WI yield at the time of auction
  • The bid the cover was well above the six month average
  • Dealers were saddled with much less than the six month average at 15.7% versus 22.1%
  • Foreign demand was strong at 65% versus 60.8% six month average
The U.S. Treasury will complete their refunding auctions for the week tomorrow when they sell $24B of 30 year bonds at 1 PM ET.

10-year Treasury yields continue to track lower towards 1.50%

The market is quiet but keep an eye out on Treasury yields

10-year yields are down 2.2 bps currently to 1.51% but the low today hit 1.50% earlier and that is a key level to watch from a technical perspective.
There hasn’t been much appetite for yields to move out of range per se since April (after failing to breach 1.75%) but we are seeing things start to get pinned closer to key levels with the 100-day moving average (red line) also resting nearby.
10-year breakevens have also retreated slightly to 2.36% from a high of 2.54% so the market is perhaps taking some cues from the Fed in recent weeks.
Tomorrow’s US CPI data will provide the next key catalyst for the bond market but in the meantime, a technical break may also weigh on yen pairs and the dollar later today.

EU, US to aspire to ending COVID-19 pandemic, vaccinate two-thirds of the world by end of next year

Reuters reports, citing a draft document prepared for a summit between the EU and US for 15 June in Brussels

The document also says that both sides are to commit to lifting steel tariffs before 1 December and also avoid any further trade disputes. A bit of wishful thinking but we’ll see how things go on that part in the months ahead.


Adding to the headline, they are also to call for a new study into the origins of the COVID-19 pandemic, which likely will not go down well with China again.
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