At the top of the hour, the US treasury will auction off $53 billion of five year notes. Recall from yesterday, the treasury auctioned off to year notes with strong demand from both international and domestic purchasers. With anxiety from Russia/Ukraine, there should continue to be strong demand for safe haven notes especially given the sharp run-up in yields seen of late.
The six month averages of the major components shows:
- Bid to cover, 2.42X
- Directs ( a measure of domestic demand), 17.0%
- Indirects ( a measure of international demand), 62.2%
- Dealers (the tend to take the residual) 20.8%
At last month's auction, the high yield came in at 1.533%. The tail was -1.4 basis point versus the six month average of -0.4 basis points. the five year yield is currently trading near 1.89%.