U.S. Treasury auctions of $40 billion of 3 year notes at a high yield of 4.093%

• High-yield 4.093%
• WI level at the time of auction 4.096%
• Tail -0.3 bps
• bid to cover 2.55x versus six-month average of 2.50X
• Directs (a measure of domestic demand) 20.44% vs six-month average of 19.8%
• Indirects (a measure of international demand) 61.71 vs six-month average of 56.3%
• Dealers (they take the rest) 17.85% vs six-month average of 22.7%

Auction grade: B

The three year auction was a solid B. The high-yield came in less than the WI level by 0.3 basis points. The bid to cover was near the six-month average. The measure directs, a major domestic demand was just above the six-month average. The international demand was higher than the average and that lowered the dealers take from the auction (which is a good thing).

So overall, the grade was above average but not quite "A" material.

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