30-year Treasury bonds
The monthly auction for 30-year Treasury bonds (or T-bonds) was held on December 10, 2015, for $13 billion. This was $3 billion lower than the previous month.
- The auction was held on December 10, 2015.
- The coupon rate was set at 3.0%, the same as in the previous month.
- The high yield fell to 3.0% in December, from 3.1% in November.
- The bid-to-cover ratio rose marginally by 0.4% and came in at 2.42x in the December auction. So far in 2015, the ratio has averaged 2.34x lower than the 2014 average of 2.47x.
The yield on 30-year Treasury bonds rose by one basis point in the secondary market, from 2.97% on December 9 to 2.98% on December 10.
Fundamental demand rose
Market demand rose to 74.3% of the accepted bids compared to 70.4% in November’s auction. Indirect bids rose and came in at 63.9% in December as compared to 60.3% in November. Indirect bids, which are bids from foreign central banks, reflect overseas demand for Treasury bonds.
The primary dealers’ share fell from 29.6% to 25.7% month-over-month due to improvements in accepted bids from indirect bidders.
Due to a fall in long-term yields in the secondary market, returns of long-term mutual funds were positive.
The Wasatch-Hoisington US Treasury (WHOSX) invests ~100% of its assets in Treasury securities with maturities below 10 years. The weekly return of the fund was up by 2.7%.
The Dreyfus US Treasury Long Term Fund (DRGBX) invests ~92% of its assets in Treasury securities with maturities below 10 years. The week-over-week return of the fund came in at 2.2%.