IRAN: 80-85% Chance Iran Deal Will Be Signed - US Official

• Treasury futures decline (USM6 -2.5 at 112-04.5) after the $25B 30Y auction (912810UU0) tailed: drawing a 5.046% high yield vs. 5.039% WI; bid-to-cover well below 5-auction average of 2.45 at 2.30x (2.39x prior).
  • Peripheral measures: indirect take-up 66.60% vs. 64.14% prior; direct bidder take-up  to 21.74% vs. 24.23% prior; while primary dealer take-up inches up to 11.66% vs. 11.62% prior, well above 9.92% 5-auction average.
  • The next 30Y auction (open) is tentatively scheduled for June 11.

A new survey by the Chicago Council on Global Affairs has found that, “Americans broadly view the US-Iran war as bad for the United States’ cost of living (86%), international relations (72%), reputation abroad (72%), and national security (65%).”

• The reports notes that, “While 55 percent think the Trump administration has done enough to destroy Iranian military assets and facilities, majorities of Americans do not think the Trump administration has done enough to pursue a negotiated resolution to the conflict (63%), consult with key allies and partners in the region (63%), limit Iranian civilian casualties (57%), or protect American civilians and military personnel in the Middle East (54%).”
• The report adds, “Just two in 10 Americans (18%) are confident Iran would comply with a deal to lift economic sanctions against it in exchange for limiting its nuclear program. Only half are confident in the United States’ compliance with the same deal (48%),” and “a plurality views the US-Iran war as a stalemate, as 45 percent of Americans think neither side in the conflict has an advantage.”

Figure 1: Overall, do you think the US-Iran war has been good or bad for: (% bad)

Source: The Chicago Council on Global Affairs

• US TSY 30Y BOND AUCTION: HIGH YLD 5.046%; ALLOT 72.06%
• US TSY 30Y BOND AUCTION: DEALERS TAKE 11.66% OF COMPETITIVES
• US TSY 30Y BOND AUCTION: DIRECTS TAKE 21.74% OF COMPETITIVES
• US TSY 30Y BOND AUCTION: INDIRECTS TAKE 66.60% OF COMPETITIVES
• US TSY 30Y BOND AUCTION: BID/COV 2.30