Following yesterday’s stellar 5Y auction, moments ago the US Treasury closed off this week’s bond issuance by selling $30 billion in 7Y paper at a yield of 2.930% – which for the second consecutive month was on the screws with the when issued which was also 2.930% at 1pm ET. This was a higher stop than last month’s 2.809%, and exactly the same with the May stopping yield of 2.93%.
While the bid to cover was so-so, and at 2.49 was below June’s 2.529 and the lowest since March, it was the internals that were strong as Indirect buyers took down 64.6% well above 60.6% in June and in line with the 6M auction average of 64.7%; Directs declined from June’s 15.2% to 12.0%, below the six auction average of 13.1%, leaving Dealers holding 23.4%, below last month’s 24.1% but above the average of 22.2%.
Overall, this was a solid auction and while not nearly as strong as yesterday’s superstrong sale of 5Y, it put the bond market in a good place as we look to sales of 3, 10 and 30Y paper next week, as well as another refunding announcement which will likely increase auction sizes across the board by another billion.
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