The U.S. Treasury auctioned off $53 billion of the five year notes at a high yield of1.880%
- High yield 1.880%
- WI level was at 1.881% at the time of the auction. Tail of -0.1 basis points versus six month average of -0.4 basis points
- Bid to cover 2.49X vs 2.42x
- Dealers 13.8% vs six month average of 20.8%
- Directs 18.4% vs six month average of 17.0%
- Indirects 67.8% vs six month average of 62.2%
There is nothing wrong with the auction. Is it an A?
I would give a grade of A- only because the tail was lower than the 6 month average. There was strong international demand and domestic demand was also above the six month average. As a result dealers were left with a smaller amount of the supply once again.
As rates have moved up in the US, the foreign demand has increased with the spike higher. In addition, there is also some additional domestic demand as a result of a sketchy stock market perhaps.
