Solid demand for U.S. Treasury bonds

Demand for another massive U.S. bond tender sale this week was solid, indicating that market demand for ultra-long-term U.S. Treasuries has not waned either, further easing market concerns about the recent climb in interest rates.

The U.S. Treasury on Thursday bid a combined size of $ 24 billion of 30-year Treasury bonds, the bid rate of 2.295%, a measure of demand bid multiple of 2.28, more than last month’s multiple of 2.176, but also below the average of the last six sales of 2.336.

Indirect buyers (indirect buyers), including foreign central banks, were allocated 60.60% of the total sale size, slightly higher than last month’s 60.5%, and direct buyers (direct buyers), including the Federal Reserve and other U.S. federal government entities, were allocated 20.2%, the highest level since December 2019. The primary dealers (primary dealers), who are obligated to buy Treasury bonds that have not been auctioned to prevent runoff, were allotted 19.2%, lower than the recent average of 19.9%.

Some commentators pointed out that the winning rate was 0.5 basis points higher than the pre-issued yield (when-issued yield) of 2.290%, which was only a slight increase given the recent market turmoil. Usually, if the cut-off yield is greater than the yield of the same maturity U.S. bond at the Time of auction closing, it means that the U.S. Treasury had to sell the bond to the low bidder, a sign of weakness on the demand side at the time of the auction.

After the tender sale results were announced, the three major U.S. stock indices rose slightly, the Nasdaq refreshed its daily high, up 2.7% during the day; spot Gold rose briefly about $5, turned up during the day, at $1727.50/oz; secondary market 30-year U.S. bond yields once down about 3 basis points, the overall intra-day gain narrowed to less than 3 basis points, 10-year U.S. bond yields also once down 3 basis points.

Thursday before the U.S. stock market, in the European Central Bank announced that it will accelerate the pace of bond purchases, the yield on the 30-year U.S. bond had also short-lived downward, accelerating climb after the release of better-than-expected U.S. jobless claims last week, U.S. stocks briefly rose above 2.30% at lunchtime to refresh the daily high, up more than 5 basis points during the day.

So far, this week’s several major U.S. Treasury bid sales have not caused the market to plunge as it did last month. Two weeks ago, the U.S. Treasury auctioned $62 billion of 7-year Treasuries on Feb. 25, with a record low bid multiple of 2.04, a measure of demand, and a winning bid rate of 1.195%, the highest cut-off yield in February. At the time, there were comments that this means that no foreign investors want U.S. Treasuries, called the most embarrassing and disastrous moment of the 7-year U.S. bond auction over the years.

On the day of the 25th, after the announcement of the results of the tender sale of Treasury bonds, the yield of each term of the U.S. bond to open the “fly” mode, the 10-year yield rose through 1.5% and 1.6% two consecutive hurdles, the day surged 23 basis points. U.S. technology stocks fell hard, with the Nasdaq plunging 3.52% in one day.

And on Tuesday, the U.S. Treasury auction of $58 billion 3-year U.S. bonds recorded a winning bid rate of 0.355%, with the bid multiple increasing from 2.391 to 2.689, a new high in June 2018. 3-year U.S. bond yields have since sunk more than 1 basis point in the short term, hitting a low of 0.3283%, with overall intra-day volatility of less than 2 basis points, which also helped U.S. stocks, especially technology stocks, to rebound strongly on the day bounce back. The Nasdaq rose more than 4% intraday that day, closing up nearly 3.7%, and the Nasdaq 100 closed up more than 4%, both the largest gain in four months.

Wednesday, the U.S. Treasury bid $ 38 billion 10-year Treasury bonds, the bid rate of 1.523%, the highest level since February last year, the subscription multiple of 2.38, higher than the average value of the previous six 2.37. Comments that the auction results “lukewarm” to avoid a disaster. After the results, the U.S. 10-year benchmark Treasury yields refresh the daily low, intra-day drop once close to 4 basis points. The day’s retreat dragged technology stocks turned down during the day, but the Dow hit a new record high.