The U.S. Treasury will auction off $44 billion of 7-year note at the top of the hour. The six month averages of the major components of the past auctions for the issue shows:
- Tail: 6-auction average 0.5bps
- Bid-to-cover: 6-auction average 2.53x
- Dealers: 6-auction average 21.3%
- Directs (a measure of domestic demand): 6-auction average 17.6%
- Indirects (a measure of international demand): 6-auction average 66.9%
The success or failure of the auction is dependent on how actual results compared to the 6-month averages. Yesterday the 2 and 5-year note auctions showed less investor demand from both domestic and international buyers indicative of less demand at current levels