The U.S. Treasury auctioned off $47 billion of 7 year notes:
- High yield of 2.499%
- WI level at the time of the auction 2.486%
- Tail +1.3 bps vs 6 month average of 0.3 bps
- Bid to cover 2.44X vs six month average of 2.31X
- Directs 28.6% vs six month average of 21.7%
- Indirects 60.9% vs six month average of 61.5%
- Dealers 10.5% vs average of 16.8%
Grade: B-/C+
The auction had some mixed results.
The good:
- Bid to cover higher than the six month average
- Strong domestic demand as direct bidders came in at 28.6% all above the 6 month average (rotation out of stocks into bonds perhaps)
- Dealer not saddled with excess supply
The bad:
- The auction still needed a 1.3 bp tail vs six month average of 0.3 basis points to distribute the issue
- international demand (indirects) was slightly less than the six month average
