The U.S. Treasury will auction off $36 billion of 10 year notes at the top of the hour. The auction results will be compared to six month averages of key components to determine whether or not there is strong to weak demand for the issue. Looking at those components:
- Bid to cover has averaged 2.48X
- Directs - a measure of domestic demand - has a six month average of 16.6%
- Indirects - a measure of international demand - has a six with average of 69.2%
- Dealers - who take the balance of the auction - has a six month average of 14.2%
The last auction came in at a high yield of 2.72% with a tail of three basis points (not a good auction). The six month average of the tail is at 0.5 basis points.
The current 10 year is down about -5.0 basis points at 2.942%. That is down from the high of 3.074% shortly after the CPI data came out this morning. The low yield today reached 2.913% before the CPI data.
