The US treasury sold $50B of 7-year notes:

  • High yield 1.905%
  • WI level at the time of auction was 1.915%
  • Tail -1.0 BP. The 6 month average is +0.5 bps
  • Bid to cover 2.36X vs six month average of 2.30X
  • Directs (a measure of domestic demand) 23.8% vs six month average of 20.8%
  • Indirects (a measure of international demand) 63.9% vs six month average of 61.1%
  • Dealers (they take the balance) 12.3% vs six month average of 18.1%

    • Auction Grade: A

    The 7 year auction is not the most liquid. Nevertheless, looking at the components the results beat the 6 month averages. There also was a tail of -1.0 basis points. The 6 month average is a 0.5% concession.

    Bid to cover was above average. The dealers took a low amount of 12.3% vs 18.1% average. The big buyers were split between directs (domestic) and indirects (overseas buyers).

    So all buyers got involved and completed the hat trick of successful auctions this week at the higher yields.

    /EURUSD