30-Year Auction Results Suggest Investors Want Higher Yields
Investors wanted a bit of a higher payback promise in order to loan Uncle Sam $16 billion over a 30-year period. The auction of 30-year bonds in that came in at 1 p.m. put the yield on the debt at 4.469%, higher than 4.435%, where it stood just ahead of the auction. We asked several bond watchers for their thoughts on today’s action in the market. Here’s what a few had to say, via emails to MarketBeat.
Guy LeBas, Chief Fixed Income Strategist, Janney Montgomery Scott: “The record 30-year sale was a bit rough. While bidders seemed less interested versus prior auctions (2.26 bid/cover ratio is well shy of last six months’ 2.50 average), indirect participation was a decent 44%, pretty close to average.”
Craig Elder, fixed-income senior analyst, Robert W. Baird & Co.: “Raises the question whether demand at the auction was lower because of the fear of inflation longer-term or is it the matter of excessive supply. Either way, we believe rates will drift higher over the next couple of years.”
Kevin Flanagan, fixed income strategist for global wealth management with Morgan Stanley: “This could be the first sign that investors are going to demand more of a concession (higher yield) in order to place longer-dated paper.”
William O’Donnell, head of government bond strategy, RBS Global Banking & Markets: “A clear disappointment … I think that the problem (besides the bigger auction size) can be laid at the feet of the Dealer community who are cutting balance sheet for year-end.”
Find the original story at WSJ MarketBeat:
30-Year Auction Results Suggest Investors Want Higher Yields
