5-Year Treasury Auction Attracts Strong International Demand

Treasuries traded off their lows after the completion of today’s $43 bln 5-yr note auction which met solid demand after yesterday’s soft 2-yr note sale. Today’s auction drew a high yield of 3.665%, which stopped through the when-issued yield by a basis point while the bid-to-cover ratio (2.48x) and indirect takedown (68.6%) were a bit above average. Post-auction the 30-yr bond is just below its flat line while shorter tenors continue holding wider losses. The desk gave a B+ rating on the auction.

Today’s $43 bln bid-to-cover ratio (2.48x) and indirect takedown (68.6%) were above average.  The desk gave an B+ rating on the auction.

  • The domestic demand was near its 12-month average indicative of stronger domestic demand
  • International demand (indirect) was comfortably above 12-month average

Auction Highlights

  • Duration: 5 Years
  • Amount:  $43 billion
  • High-yield 3.665%
  • WI level at the time of the auction 3.675%
  • Stopped through by a basis point
  • Bid to cover 2.48X versus 12-month average of 2.43X
  • Directs 18.2% versus 12-month average of 18.3%
  • Indirects 68.6% versus 12-month average of 64.6%
  • Dealers 13.02% versus 12-month average of 17.1%

Auction grade: B+

Yields after the auction.

  • 2-yr: +4 bps to 4.04%
  • 3-yr: +7 bps to 3.86%
  • 5-yr: +6 bps to 3.66%
  • 10-yr: +3 bps to 3.56%
  • 30-yr: +1 bp to 3.77%

Prior auction results:

  • High yield: 4.109%
  • Bid-to-cover: 2.48
  • Indirect bid: 69.9%
  • Direct bid: 19.0%

Average results of previous 12 auctions:

  • High yield: 3.453%
  • Bid-to-cover: 2.43
  • Indirect bid: 64.6%
  • Direct bid: 18.3%

Live From the Pit

From The TradersCommunity US News Desk