US treasury auctions off $40 billion of 3 year notes at a high yield of 4.318%

US treasury auctions off $40 billion of 3 year notes at a high yield of 4.318%

• High yield 4.318%
• WI level 4.31%
• Tail 0.8 basis points vs. six-month average of 0.2 basis points
• Bid to cover 2.57X vs. six-month average of 2.49X
• Directs 19.55% vs. six-month average of 19.6%
• Indirects 53.4% vs. six-month average of 57.5%
• Dealers 27.05% vs. six-month average of 22.9%

Not a great auction from the treasury. Foreign buyers were much less than expectations. The dealers were saddled with 27% while above the average of around 23%. The bid to cover was not that bad vs. the average but there was a higher than expected tail of 0.8 basis points vs. 0.2 basis points average over the last 6 months.

Auction grade: D+/C-