Mediocre 5Y Auction Tails Despite Solid Foreign Demand

One day after a stellar 2Y auction which stop through almost 1 basis point despite the plunge in yields, today’ 5Y auction was a far less exciting affair.

Stopping at a high yield of 2.785%, the sale of $49BN in 5Y paper not only priced at the highest yield since Nov 2018, but tailed the 2.776% When Issued by 0.9bps.

The bid to cover of 2.41 was also subpar, coming at the lowest level since December and well below the 2.47 recent average.

Internals were more solid, with Indirects (i.e., foreign buyers) awarded 64.0%, above last month’ 60.2%, and in line with the 64.0% recent average. And with Directs taking a healthy 19.5%, meant Dealers were left holding just 16.5%, below the 18.9% recent average.

Overall, a mediocre auction yet one which came more or less in line with expectations, and thus had little to no impact on rates.