The U.S. Treasury will auction off a $42 billion of reopened to your notes at the top of the hour. The major component averages over the last 6 months show:
- Bid-to-Cover: 2.71x
- Tail: -0.2bps
- Directs (a measure of domestic demand) 20.0%
- Indirect (a measure of domestic demand) 61.9%
- Dealers:(they take the rest) 18.1%)
The last auction high yield came in at 4.3% with a tail of -1.5 bps. The Bid-to- cover was indicative of a strong demand at 2.90X. Two-year yields are higher now near 4.75% as a more hawkish fed is now expected.
The two-year note auction is the first of three note auctions this week. Tomorrow, the treasury will auction off $43 billion of the 5-year notes. On Wednesday they will auction off $35 billion of 7 year notes.
