The deluge of bond issuance is upon us.As Nomura notes, following last week’s massive U.S. IG issuance (3rd largest week all-time at $60B), the market expects another $25-$30B in the pipeline this week (~$9B in high grade supply yesterday), on top of a combined $73BB of 3-, 10- and 30-year Treasury securities to be sold this week, the 2nd largest amount across said tenors in one week since 2010, moments ago the US Treasury concluded the first of this week’s coupon auctions, which was the sale of $35 BN in 3 Year notes.
Printing at a high yield of 2.821%, this was the highest yield since May 2008 (when it was suspended until November 2008, at which point it had tumbled to sub-2%), and tailing the When Issued 2.820% by just 1 basis point.
The internals were mediocre, with Indirects taking down 46.3% of the auction, above the 42.7% in August, but below the 48.1% 6 month average. Directs took down 10.7%, in line with historical averages leaving Dealers with 43.0%.
The auction took place as the 10Y crept up to session highs, just above 2.97%, even though the 2s10s barely budged, and was last seen 1 basis point higher at 23.2bps.
And with the first of the week’s coupon auctions digested without much trouble, all eyes turn to tomorrow’s 10Y reopening which will see some $23 billion sold to the willing masses.
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