Treasury Auctions 2-year Notes at 5.024%, Part of $133 Billion Fresh Bond Supply This Week

U.S. Treasuries found support in all tenors after the $45 billion 2-yr note sale met solid demand. The sale drew a high yield of 5.024%, which stepped through the when-issued yield by 0.4 bps, while the bid-to-cover ratio (2.94x) and indirect takedown (65.0%) were comfortably above average. The desk gave an A rating on the auction. This week brings some new supply. There is today’s $45 billion, 2-yr note auction, a $46 billion, 5-yr note offering later today, and a $36 billion 7-yr note auction on Tuesday.

Today’s $45 bln bid-to-cover ratio (2.95x) and indirect takedown (65.0%) were above average.  The desk gave an A rating on the auction.

  • The domestic demand was below its six-month average indicative of softer domestic demand
  • International demand (indirect) was above the six-month average
  • Primary dealers were left with 15.00% versus normal around 18.8%

Auction Highlights

  • Duration: 2 Years
  • Amount:  $45 billion
  • High-yield 5.024%
  • WI level at the time of the auction 5.028%
  • Tail 0.3 basis points
  • Bid to cover 2.94X versus 12-month average of 2.68X
  • Directs 20.0% versus 12-month average of 20.7%
  • Indirects 65.0% versus 12-month average of 60.5%
  • Dealers 15.0% versus 12-month average of 18.8%

Auction grade: A

Yields after the auction.

  • 2-yr: UNCH at 5.05%
  • 3-yr: -3 bps to 4.71%
  • 5-yr: -1 bp to 4.43%
  • 10-yr: -1 bp to 4.23%
  • 30-yr: +1 bp to 4.30%

Yields Before the Auction.

  • 2-yr: +2 bps to 5.07%
  • 3-yr: -1 bp to 4.73%
  • 5-yr: UNCH at 4.44%
  • 10-yr: -2 bps to 4.22%
  • 30-yr: -2 bps to 4.28%

Prior auction results:

  • High yield: 4.823%
  • Bid-to-cover: 2.78 
  • Indirect bid: 65.4%
  • Direct bid: 20.8%

Average results of previous 12 auctions:

  • High yield: 4.289%
  • Bid-to-cover: 2.68
  • Indirect bid: 60.5%
  • Direct bid: 20.7%

Live From the Pit

From The TradersCommunity US News Desk