5-Yr Auction Reaction
U.S. Treasuries have dipped from their midday highs, returning most tenors to their starting levels.
The retreat from the day’s best levels picked up a bit after today’s second auction—a $70 bln 5-yr note sale—met much weaker demand than the earlier 2-yr note offering.
The just completed 5-yr sale drew a high yield of 4.408%, tailing the when-issued yield by nearly a basis point while the bid-to-cover ratio (2.28x vs 2.38x average) and indirect takedown (59.2% vs 63.6% average) were below average.
The U.S. Treasury will complete this week’s quick auction slate with a $44 bln 7-yr note sale tomorrow.
Yields After:
2-yr: -1 bp to 4.32%
3-yr: -1 bp to 4.35%
5-yr: -2 bps to 4.40%
10-yr: -3 bps to 4.65%
30-yr: -3 bps to 5.13%
Treasury Auction Results
$70 bln 5-year Treasury note auction:
: High yield: 4.408% (When-Issued: 4.399%)
Bid-to-cover: 2.28
Indirect bid: 59.2%
Direct bid: 27.2%
Average results of previous 12 auctions:
High yield: 3.822%
Bid-to-cover: 2.38
Indirect bid: 63.6%
Direct bid: 25.0%
Prior auction results:
High yield: 4.200%
Bid-to-cover: 2.35
Indirect bid: 61.6%
Direct bid: 25.5%