30-year Bond Auction Results Better Than Expected
There has been a lot of anxiety in the market about the upcoming Treasury bond auctions. In particular, the bears have been saying that the 30-year auction would go terribly, as foreign central banks no longer desire long maturity U.S. bonds.
The results of today's auction may give pause to that theory, at least for the time being. The bond auction of 30-yr bonds today was met with better than expected demand.
The high yield came in at 4.72%, vs. expectations that it would hit 4.80%. The bid/cover ratio was 2.68x, one of the highest readings since the 30-yr issuance resumed. And the foreign participation was 49%, the highest reading since Feb. 2006.
This was a welcome sign for the markets. After touching 4.00% this morning, the yield on the 10-year Note has turned sharply lower, currently near 3.84%. The news is also helping boost stocks. The S&P 500 has broken above the key 950 resistance I have been writing about (currently 954). If it can manage to close above that level, and volume increases into the close, it would be another bullish sign at a time when most every investor I read is turning cautious.