$13B in 20-year bonds sold by Treasury at 5.469% high yield

• Previous auction yield was 5.420%.

The 20-year auction details: Jesus Christ.

• The WI level at auction time was 5.460%.

• The high yield was 5.469%.

• At auction time, the WI level stood at 5.460%.

• The tail came in at 0.9 basis points, versus the average of 0.2 basis points.

• Bid-to-cover ratio was 2.73X, above the 2.62X average.

• Direct bidders took 31.6%, compared to the average of 22.9%.

• Indirect bidders accounted for 58.2%, below the 65.2% average.

• Dealers received 10.3%, versus the 11.9% average.

Auction grade: C.

Overall, the auction was mixed. The Treasury paid 0.9 basis points above the WI yield to place the bonds, a larger concession than the 0.2 basis point average. Indirect demand also came in softer than average. On the positive side, bid-to-cover was stronger, direct bidders increased their participation, and dealers took less supply than usual. These demand measures help offset the weaker pricing, but the larger tail prevents an above-average grade.

Generally, the 20-year issue is not a strong part of the yield curve. With the 20-year yield at 5.469% higher than the 30-year at 5.4133% and the 10-year at 5.106%, it points to less overall demand from investors. In a normal positively sloped yield curve, like the current one, the 20-year yield should be lower than the 30-year but higher than the 10-year.