Solid 30-Year Treasury Auction… Only 3.09%

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The last of this week’s Treasury bond auctions went off rather well.  This was the Treasury auctioning off $16 billion in long bonds, or the 30-Year Treasury Bonds.  The yield went off at 3.09% and that was the lowest auction yield since January.  The on-the-run long bond almost hit 3% just on Wednesday when it was looking like the bond market was trying to price in another recession.

The bids came to 33.8% as indirect bids, usually foreign demand. Direct bids were tallied up at 15.4% for the highest long bond direct participation in 2012. The bid-to-cover ratio came in well at 2.73. Some 63.8% of the bids were at the high for this 3.00% coupon.

Rick Santelli on CNBC gave this one an “A-” rating” but we would rate it better considering that bond yields hit a near-term low just on Wednesday. Here is another reason that we think this was a stellar auction.  Imagine loaning $10,000.00 to Uncle Sam at roughly 3%, which you get taxed on by the way, for a period of thirty years.  Over the entire life of the thirty years you only get $9,000.00 in interest.  This is called a flight to safety and had the auction come on a day that was not the first day in six sessions where stocks were heading south.

The DJIA may be up 64 points on last look at just under 12,900 but it needs to be mentioned that the DJIA was trading up at 13,300 as recently as May 3.

JON C. OGG

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