Primer: US to sell USD 25bln of 30-year bonds at 18:00GMT/13:00EST

Auction History Tail: (prev. 0.1bps, six-auction avg. -0.1bps) High Yield: (prev. 5.618%, six-auction avg. 5.211%) B/C: (prev. 2.54x, six-auction avg. 2.44x) Dealer: (prev. 6.79%, six-auction avg. 9.49%) Direct: (prev. 20.89%, six-auction avg. 20.02%) Indirect: (prev. 72.32%, six-auction avg. 70.49%) What could support the auction? Intraday cheapening: The 30-year yield has risen ahead of today's auction, providing some additional yield concession. The move follows renewed geopolitical tensions after US President Trump said Washington does not need a deal with Iran and instructed VP Vance to shift his focus towards domestic issues rather than resolving the Iran conflict. The subsequent rise in oil prices has added to inflation concerns, weighing on Treasuries. Lower volatility: The MOVE index has declined to around 95 from 106 at the time of the previous auction, suggesting reduced Treasury market volatility, which could encourage investors to take on longer-duration exposure. What could weigh on the auction? Lower outright yields: The 30-year yield currently trades around 5.42%, approximately 20bps below the previous auction's 5.618% high yield, reducing the outright yield attractiveness of the offering compared with October. Curve dynamics: The 3s30s spread currently trades around 52bps, narrowing considerably from 74bps at the time of the October auction. This flattening reduces the additional yield compensation available from extending into the 30-year sector from the front end, potentially weighing on the relative attractiveness of the offering. Recent auction demand: Treasury auction results earlier in the week have been somewhat underwhelming. Monday's 3-year auction was mixed, albeit leaning soft, while Tuesday's 10-year auction was notably weak, tailing by 1bp with a sharp decline in indirect participation. Although the 10-year result followed an exceptionally strong October offering, the recent auction performance could suggest some caution among investors towards adding duration exposure. Previous Auction The previous USD 22bln 30-year Treasury auction was fairly average, tailing the WI by 0.1bps at 5.618%, compared with the prior 2.7bp stop-through and the then-six-auction average 0.1bp stop-through. The bid-to-cover ratio eased to 2.54x from 2.61x but remained comfortably above the then-six-auction average of 2.41x. Dealer participation was relatively low at 6.79%, while indirect participation was solid at 72.32%, suggesting reasonable underlying demand despite the marginal tail.