After a strong 2Y auction yesterday, moments ago the US Treasury sold $37BN in 5Y paper in what was at best a mediocre auction. The high yield of 2.765% was 1 basis point wide of the When Issued, 2.765% and below last month’s 2.825%.
The Bid to Cover of 2.49 was also below the 6 month average of 2.52, and well below last month’s 2.61.
The silver lining was the Indirects remained solid, and took down 66.2% of the auction, above the 6 month average of 61.2% but below the July 67.2%. Directs took down 9.0%, below the 10.6% average, leaving Dealers holding 24.7%, in line with the average print of 28.2% if fractionally above last month’s 24.1%.
Overall, a mediocre auction if one that confirms demand for US paper remains solid even as the average auction size continues to increase.
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