Treasuries sat near their lows as the market responded to the results of today’s $43 bln 5-yr note auction ahead of tomorrow’s $35 bln 7-yr note offering. The high yield was 3.973% over the WI level 3.96%. Today’s $43 bln bid-to-cover ratio (2.46x) and indirect takedown (64.51%) were above average. The desk gave a B rating on the auction. Selling pressure in the bond market flowed over to selling in equities in an illiquid market. The 10-yr note yield, which hit 3.80% overnight, settled at 3.89%. The 2-yr note yield, which hit 4.33% earlier, settled at 4.35%.
Today’s $43 bln bid-to-cover ratio (2.46x) and indirect takedown (64.51%) were above average. The desk gave an B rating on the auction.
- The domestic demand was above its six-month average indicative of stronger domestic demand
- International demand (indirect) was comfortably above the six-month average
Auction Highlights
- Duration: 5 Years
- Amount: $43 billion
- High yield 3.973%
- WI yield 3.96%
- Tail -1.3 vs. six-month average of 1.2 basis points
- Bid to cover 2.46X vs 6-month average 2.35X
- Directs 18.56% vs 18.2% 6-month average
- Indirects 64.51% vs 62.4% 6-month average
Auction grade: B
Yields after the auction
- 2-yr: +3 bps to 4.38%
- 3-yr: +3 bps to 4.20%
- 5-yr: unch at 3.98%
- 10-yr: -2 bps to 3.87%
- 30-yr: -2 bps to 3.95%
Prior auction results:
- High yield: 3.974%
- Bid-to-cover: 2.39
- Indirect bid: 66.2%
- Direct bid: 18.7%
Average results of previous 12 auctions:
- High yield: 2.653%
- Bid-to-cover: 2.41
- Indirect bid: 63.2%
- Direct bid: 17.8%
Live From the Pit
From The TradersCommunity US News Desk