U.S. Treasury auctions off $44 billion of 7 year notes at high yield of 2.908%

• High yield 2.908%
• WI level 2.891%
• Tail 1.7. The six month averages 0.4 basis points
• Bid to cover 2.41X. The six month average is 2.34X
• Directs 19.8%. The six month average is 22.9%
• Indirects 65% . The six month averages 61.6%
• Dealers 15.2%. The six month averages 15.4%.

Auction Grade: D

The $44 billion auction was met with decent demand from international investors but lacked domestic demand. As a result there was a large 1.7 basis point tail (versus average of 0.4 basis points). The dealers took what has been average over the last 6 auctions due to the decent international demand, but that was only on a large concession (i.e., tail).