US Treasury sells $70 billion of 5-year notes at high yield of 4.393%
Key Takeaways
- •The Treasury awarded $70 billion of 5-year notes at a high yield of 4.393%, just above the 4.391% when-issued level, producing a 0.2 basis-point tail that was tighter than the 0.7 basis-point average.
- •The bid-to-cover ratio of 2.37x came in modestly above the 2.32x average, pointing to slightly firmer overall demand.
- •Direct bidders, mainly domestic institutions buying for their own accounts, secured 28.4% of the issue, well above their 21.2% average.
- •Indirect bidders, a widely watched gauge of foreign demand, took 61.5% of the sale, below their 65.4% average, while primary dealers were left with a below-average 10.05%.
- •The auction received a grade of B and is part of the Treasury's regular monthly coupon schedule, which pairs the 5-year sale with 2-year and 7-year note offerings.
The US Treasury sold $70 billion of 5-year notes at a high yield of 4.393%, against a when-issued (WI) level of 4.391% at the time of the auction. The sale is part of the Treasury's regular monthly coupon calendar, which typically pairs the 5-year offering with a 2-year note auction earlier in the week and a 7-year note sale to follow, and each result is watched as a real-time read on investor appetite for US government debt.
Auction results
- High yield: 4.393%
- WI level at the time of the auction: 4.391%
- Tail: +0.2 basis points
- Bid-to-cover: 2.37x versus 2.32x
- Directs: 28.4% versus an average of 21.2%
- Indirects: 61.5% versus an average of 65.4%
- Dealers: 10.05% versus an average of 13.4%
Domestic buyers — the direct-bidder category, where institutions bid for their own accounts rather than through intermediaries — were the stronger side today, taking 28.4% of the issue, while international buyers, the indirect category widely tracked as a gauge of foreign demand for US debt, came in below their average at 61.5%. Primary dealers, who are obligated to bid and absorb whatever other buyers leave, took a below-average 10.05%. The bid-to-cover ratio, which compares total bids with the amount on offer as a broad measure of overall demand, was modestly higher than the average. The tail — the gap between the highest yield accepted and the WI level, where a smaller tail signals demand closer to market expectations — although positive, was better than the average of 0.7 basis points.
Auction grade: B
Source: investingLive
