We have a hat trick of weak Treasury auctions this week as the 30 yr bond offering was soft. The yield at 3.05% was about 1.5 bps above the when issued. The bid to cover of 2.19 was below the one year average of 2.30 and dealers got stuck with almost 36% of the auction vs the 12 month average of 29%. Prices and yields are not responding as it’s likely explained because the supply is now done for the week and prices adjusted all week. The 30 yr yield today stands at 3.05% vs 2.98% last Friday. The 10 yr yield is up by 5 bps and the 2 yr is higher by 3 bps on the week.
With insurance companies and pension funds typically heavy buyers of 30 yr paper, it’s not as an effective measuring stick of market sentiment compared to the 10 yr and the short end auctions. The recent uptick in yields seems more in response to the rise in Europe post French vote than any positive feel on US economic data. The US Citi Surprise index sits today at -19.2 from -18.2 last Friday.
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.