30-Year Treasury Auction A Success Ahead of FOMC

The U.S Treasury picked an interesting time to sell a 30-Year Long Bond auction. This was also an early-close auction. After all, this is the day that the FOMC is due to talk about or install more quantitative easing measures. Today’s auction was $13 billion of the 29-year and 11-month. The 2.75% coupon Long Bond is set to mature on August 15, 2042.

The Treasury noted, “In view of the upcoming FOMC statement scheduled to be released around 12:30 p.m. on September 13, 2012, the noncompetition and competitive closing times for the 29-year 11-month bond auction to be held on September 13, 2012, will be 11:00 a.m. and 11:30 a.m. ET, respectively.”

The bond auction priced at $97.088998 for a yield to maturity of 2.896%.  It is important to know that the on-the-run 30-year WI was at almost 2.91% or so, so this was considered a strong demand auction.  The average bid-to-cover had been 2.62 for prior 30-year auctions, and today’s bid-to-cover was 2.68. Some $34,884,951,500 was tendered in dollars.  The low yield was 2.80% and the median yield was 2.86%.

CNBC’s Rick Santelli said that he would give this auction a “B+” equivalent of a school grade and that is after prior auctions from the Treasury this week failed to show much interest.

Here is the competitive accepted dollar amounts; Primary Dealer $6,357,550,000 Direct Bidder $1,606,500,000 Indirect Bidder $5,025,900,000

JON C. OGG