Treasury 20-Year Auction Sets a Record 5.469% High Yield

The U.S. Treasury’s latest 20-year bond sale produced a record 5.469% high yield and a fourth consecutive tail ahead of the department’s Nov. 4 refunding announcement.

The yield was 49 basis points above September’s auction result and 0.9 basis point above the 5.460% when-issued level. The tail narrowed from 2 basis points in September.

The bid-to-cover ratio rose to 2.73 from 2.57, above the recent average of 2.62. Indirect bidders took 58.2% of the sale, up from 52.5% in September but below their recent 65.2% average.

Direct bidders received a record 31.6%, compared with 30.7% in September. Dealers took 10.3%; at least four auctions earlier this year had single-digit dealer shares.

Citi’s forecast for the Nov. 4 refunding calls for $3 billion cuts to both 20-year and 30-year auction sizes and raises the possibility of ending 20-year sales.