Source: Zhitong Finance
On Thursday, the US Treasury successfully held another $25 billion 30-year treasury bond auction this week. Foreign demand surged and set the record for the largest single transaction in 13 months.
The final transaction interest rate for the 30-year treasury bonds in this auction was 4.36%, up from 4.229% in the previous auction on January 11. The pre-issue interest rate for this auction was 4.38%, and the final transaction interest rate was 2 basis points lower than the pre-issue interest rate, indicating that there was no “end” phenomenon reflecting weak demand. This difference in interest rates is the biggest since January 2023, highlighting the strong demand for this auction in the market.
The bid multiplier for this auction reached 2.4, which was not only higher than the previous 2.37, but also surpassed the average of the last six auctions of 2.38, showing that the market is paying close attention to this treasury bond.
In the demand component, direct domestic bidders, including hedge funds, pension funds, mutual funds, insurance companies, banks, government agencies and individuals, received an allocation ratio of 14.5%, slightly lower than the recent average of 17.2%, indicating that domestic demand is at a normal level.
Overseas demand, on the other hand, became one of the highlights of this auction. Indirect bidders, usually including foreign central banks, etc., participated in the auction through tier-1 traders, and their allotment ratio was as high as 70.7%, the highest since June 2023, far higher than 67.8% in January, indicating that overseas investors are in strong demand for US long-term treasury bonds.
The allocation ratio for Tier 1 traders is 14.8%. Although it is slightly higher than the 14.5% last month, it is still lower than the recent average of 17.2%, reflecting that investors other than Tier 1 traders are more interested in this auction.
The US Treasury sold a record $42 billion 10-year Treasury bonds yesterday at a yield lower than expected. Buyers flocked to overcome concerns about insufficient demand. The total amount of US Treasury bonds issued this year will reach 10 trillion US dollars. In the election year, US President Joe Biden will need to fund many stimulus plans.
editor/tolk