AUCTION PREVIEW: US USD 12bln 30y Bond Auction

On Wednesday, the US Treasury is to sell USD 12bln in 30-year bonds, with the results expected shortly after 1800BST (1200CDT).

Looking at the historical data for the 30-year auctions, the B/C at the last auction held was 2.32, dealers took down 27.8% of the issue and indirect bidders accounted for 66.8%. The auction prior to the last had a B/C of 2.31 and indirect bidders accounted for 61.7% of the issue.

The average of the past six auctions has seen a B/C of 2.29, dealers have taken 30.1% and indirects have taken 62.8% of the paper over that horizon.

The average of the past three auctions has seen a B/C of 2.32, dealers have taken 29.8% and indirects have taken 64.1% of the paper over that horizon.

4 of the last 6 30y auctions have tailed. Societe Generale believe that the current 30y is trading rich on an asset swap basis compared with the previous two auctions, which adds more negative bias. As a result SocGen suggests that the “upcoming auction will likely need concession to be underwritten smoothly with the current 30y note yield trading below the stop-out rates from the 10 most recent 30y auctions,” although they do believe that the steepening of the 5s30s curve since the last auction should help with the takedown.

13 Sep 2017 - 17:00- Fixed IncomeData- Source: RANsquawk

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