With 2-Year yields blowing out alongside the 10Y yield hitting 3.00% for the first time since 2014, and rising as high as 2.50% on Tuesday morning – the highest since the summer of 2018 – the only question ahead of today’s 2Y auction was whether it would price above or below this key level. The answer was revealed moments ago when the Treasury sold $32BN in 2Y paper – the biggest auction since April 2014 – at a yield of 2.498%, just shy of 2.50%, although tailing the When Issued 2.493% by 0.5bps and the highest since the 2.82% in July 2008.
The internals were just as ugly, with the Bid to Cover sliding from 2.91 to 2.61, and below the 6 auction average of 2.81. Directs bidders were awarded 15.35%, fractionally more than the 6 auction average of 14.8%, although Indirects showed little enthusiasm for today’s auction, taking down just 41.6% well below the 46.5% average, and for the first time since the December 2Y auction, Indirects also took down less than the 43.10% that was awarded to Dealers.
Overall, a poor, rocky auction, as the market is growing increasingly convinced that the Fed will continue hiking rates for a while, and as a result the Treasury may soon have trouble selling paper on the short, if not so much, long end.
via RSS https://ift.tt/2qVBBiL Tyler Durden