In a day of record debt issuance, moments ago the US Treasury sold not only $55bn in 4 week bills at a yield of 1.38% (higher than the 6 month average of 1.348%) at a bid to cover that tumbled from the 6MMA of 3.12 to just 2.48, the lowest since July 2008, suggesting that demand for 1 month US paper was not exactly stellar…
… but also $28 billion in 2Year notes, the day’s first coupon issuance.
Unlike the 4-Week auction, which saw surprisingly poor interest judging by the plunge in the BTC,the 2Y auction was average at worst, pricing at 2.255%, stopping through the When Issued 2.256% by 0.1 basis point. This was the highest 2Y yield since August 2008, one month before the Lehman bankruptcy. As a reminder, the auction size on today’s auction was increased from $26bn – where it was since January 2015 – to $28bn.
Yet while the headlines were good, the internals were not: just like the 4 Week, the Bid to Cover tumbled from 3.222 to 2.722. This was modestly below the average 6 month BTC of 2.83.
Another indication of poor reception is that Indirects took down just 36.3% of the auction, well below the 58.3% last month, and in line with the 46.4% 6 auction average. Directs were awarded 13.4%, fractionally below January’s 15.9%, and the 6 month average of 15.5%. This left Dealers with 40.3%, slighly above the 38.1% 6 auction average.
Overall, two mediocre auction which however was still impressive in light of the record amount of debt sold today, and likely an indication that yields at current levels are neither too high, nor too low to absorb at least the near-term mountain in upcoming issuance.
via Zero Hedge http://ift.tt/2Hw3JjW Tyler Durden