10-year yield hits session highs after weakest auction since 2009

10-year yield hits session highs after weakest auction since 2009

Business
December 12, 2022 by secret
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10-year Treasury note yields jumped to their highest levels of the session on Monday after an auction of $32 billion in 10-year notes saw the weakest demand, by one measure, since December 2009. The newly auctioned notes were sold with a “tail” of 3.7 basis points compared to the when-issued yield. That’s the largest tail
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10-year Treasury note yields jumped to their highest levels of the session on Monday after an auction of $32 billion in 10-year notes saw the weakest demand, by one measure, since December 2009. The newly auctioned notes were sold with a “tail” of 3.7 basis points compared to the when-issued yield. That’s the largest tail for a 10-year note auction since December 2009, according to data supplied by Jefferies’ Thomas Simons. Afterwards, 10-year yields were trading more than 5 basis points higher on the day to 3.516%. The “tail” means the newly auctioned notes were sold at a lower price than similar notes already trading in the secondary market, since bond prices move inversely to yields. “The 10 year note auction was terrible. The yield of 3.625% was almost 4 bps above where it was pricing in right before,” said Peter Boockvar, chief investment officer of Bleakley Financial Group. Boockvar added that the bid-to-cover ratio for the reopening auction was 2.31, below the one-year average of 2.44 and the second-weakest bid-to-cover for any 10-year note auction since September 2020. What’s more, direct and indirect bidders took half the notes sold at the auction, leaving dealers with the balance. “Bottom line, after a nice drop of about 75 bps over the past few months in the 10-year yield, demand here was pretty tepid and in the face of dramatic curve inversion,” Boockvar said.



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