tyb
Dismal Demand For Ugly, Tailing 5Y Auction
One day after a ugly 2Y auction priced with the first tail for 2019, moments ago the US Treasury sold $41 billion in 5Y paper in an auction that was even uglier.
The high yield printed at 1.824%, above the 1.791% in June and a 1bp tail to the 1.814% When Issued, the biggest tail since March. The bid to cover slumped from 2.35 to 2.26, far below the 2.39 six auction average, and the lowest bid to cover since December 2018.
The internals were just as ugly: Indirect demand slumped, with the takedown for foreign official investors dropping to just 53.4%, not only far below the 6 auction average of 58.8%, but the lowest since December 2015. And with Directs also showing little enthusiasm for today's auction, taking down just 13.7%, or the least since December, that left Dealers holding 32.9% of the final allotment, the most since December.
Overall, and just like yesterday's 2Y auction, another very subpar auction in every aspect, which however is surprising considering that it is certainly the market's consensus that a recession will take place some time in 2020, and as such the yield on short-dated paper should only continue to slide. Unless of course, foreign investors have better things to do with their money, even as Dealer holdings of Treasury's continue to surge.
https://www.zerohedge.com/news/2019-07-24/dismal-demand-ugly-tailing-5y-auction
How Treasury Auctions Work
Marketable securities can be bought, sold, or transferred after they are originally issued. The U.S. Treasury uses an auction process to sell these securities and determine their rate or yield. Annual auction activity:
*Offers several types of securities with varying maturities
*Conducted 284 public auctions in 2018. View the current financing pattern.
*Issued approximately $10.194 trillion in securities in 2018.
To finance the public debt, the U.S. Treasury sells bills, notes, bonds, Floating Rate Notes (FRNs), and Treasury Inflation-Protected Securities (TIPS) to institutional and individual investors through public auctions. Treasury auctions occur regularly and have a set schedule. There are three steps to an auction: announcement of the auction, bidding, and issuance of the purchased securities.
Announcement
You can find out when Treasury securities will be auctioned by viewing the recent announcements of pending auctions. Once an auction is announced, your institution may submit a bid for the security. You may bid directly through TreasuryDirect (except for Cash Management Bills), TAAPS (with an established account), or you can make arrangements to purchase securities through a broker, dealer, or financial institution.
Bidding
When participating in an auction, there are two bidding options - competitive and noncompetitive.
*Competitive bidding is limited to 35% of the offering amount for each bidder, and a bidder specifies the rate, yield, or discount margin that is acceptable.
*Noncompetitive bidding is limited to purchases of $5 million per auction. With a noncompetitive bid, a bidder agrees to accept the rate, yield, or discount margin determined at auction.
*Bidding limits apply cumulatively to all methods that are used for bidding in a single auction.
At the close of an auction, Treasury awards all noncompetitive bids that comply with the auction rules and then accepts competitive bids in ascending order of their rate, yield, or discount margin (lowest to highest) until the quantity of awarded bids reaches the offering amount. All bidders will receive the same rate, yield, or discount margin at the highest accepted bid.
https://www.treasurydirect.gov/instit/auctfund/work/work.htm
Treasury auction tail just means weak demand-they have to call it something other than "it sucked".
same to you anon
>"The hard part about playing chicken is knowin' when to flinch."
Go with that..makes a lot of sense.
moar to come!
Nailed it!
Egypt Says IMF Approves Last Installment of $12 Billion Loan==
Egypt’s central bank Governor Tarek Amer said the International Monetary Fund has approved the last installment of a $12 billion loan program.
The IMF’s board approved the disbursement of the $2 billion payment, and the amount will be transferred this week, Amer told Bloomberg.
IMF officials didn’t immediately answer an email seeking comment. A calendar of the fund’s executive board meetings shows that it’s due to discuss Egypt’s loan July 24.
Egypt secured the agreement in 2016 after taking measures that included devaluing its currency and slashing fuel subsidies.
The country has since attracted tens of billions of dollars into its debt market and the central bank’s foreign reserves have surged to more than $44 billion.
https://www.bloomberg.com//news/articles/2019-07-24/egypt-says-imf-approves-last-installment-of-12-billion-loan