On Wednesday local time, the U.S. Treasury auctioned $13 billion of 20-year Treasury bonds, although the yield is at a fairly high level on record, but from a number of other indicators, the auction has received strong demand.
The winning rate for this auction was 4.818%, the second highest in history, after 4.542% last time on March 19 and a high of 5.257% last October. The pre-issuance rate was 4.843%, 2.5 basis points higher than the final bid rate and the largest since January last year.
The auction had a bid multiple of 2.82, the highest since June last year, higher than the previous one's bid of 2.79 and higher than the average of 2.65 over the past six renewals.
Direct bidders, a measure of domestic demand in the United States, including hedge funds, pension funds, mutual funds, insurance companies, banks, government agencies and individuals, were allotted 16.2 percent, compared with an average of 18.3 percent in the last six auctions.
Overseas demand is strong and bright. As a measure of overseas demand, indirect bidders, which are usually tendered by institutions such as foreign central banks through primary dealers or brokers, were allotted up to 74.7%, the highest since February 2023 and only slightly below the all-time high of 73.5% last month.
As the "pick-up man" who undertakes all the unpurchased supply, the proportion of primary dealers who have been allocated in this round is only 9.1%, the lowest since June 2023 and one of the lowest levels on record, highlighting the strong real demand.
It should be noted that the market demand for 20-year Treasury bonds is generally much lower than that of 10-year and 30-year Treasury bonds, and they are traditionally illiquid. Therefore, a number of data in this auction are eye-catching, which has boosted the market. After the results of the 20-year Treasury auction were released, the yield on the 20-year U.S. Treasury bond fell by more than 2 basis points in the short term, falling below 4.82%, reaching a minimum of 4.8162%, and falling by 7 basis points overall during the day.
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