US treasury to auction off $42 billion and 7 year notes at the top of the hour

The US treasury will auction off $42 billion and 7 year notes at the top of the hour.

The 2 year note auction on Tuesday was met by strong demand. The 5 year note yesterday at below average demand.

The 6 month averages of the major component pieces of the auction shows:

• Bid to cover, 2.37X
• Directs (a measure of domestic demand), 23.0%.
• Indirects (a measure of international demand), 61.8%
• Dealers (they take the rest), 15.2%

The last auction high yield came in at 2.908%. That tailed by +1.7 basis points vs the WI level at the time of the auction (bad auction). The 6 month average for tails is +0.5 basis points.