After a mediocre, tailing 2Y auction, which yesterday priced with a small tail, the just concluded sale of an upsized $36 billion in 5Y paper was nothing short of stellar.
Pricing at 2.815%, above last month’s 2.719% and if below May’s 2.864%, the auction stopped a whopping 1 basis point through the When Issued, the biggest since December 2016. The Bid to Cover likewise was surprisingly strong, with 2.61 in bids for every bond tendered.
The internals, however were most impressive, with a whopping 67.2% in Indirects, higher than both last month’s (62%) and the 6 month average (60.8%), and the highest going back all the way to September 2017. Directs dipped modestly to 8.7%, below the 10.7% 6MMA, leaving Dealers holding 24.1% of the auction, the lowest since last November.
Overall, a stellar auction in light of today’s equity market rebound, one which sets us up quite well for tomorrow’s final 7Y bond sale.
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