Following excellent 3 yr and 10 yr auctions, the Treasury found the results of the non inflation protected 30 yr not as good. The yield was a few bps above the when issued and the bid to cover of 2.49 was below the previous 12 auction average of 2.65. Also, dealers got stuck with 59.3% of the auction, the most since Jan. Bottom line, the make up of buyers of 30 yr paper is somewhat different than other areas of the curve as more pension funds and insurance co’s like the long term asset to match up with their liabilities. This said, inflation expectations are still very important especially with yields this low. Today’s 30 yr is the 1st longest term bond auction since the Sept 13th Fed news.
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