Stellar 3Y Auction Sees Biggest Stop Through Since August On Surge In Foreign Demand

After several mediocre auctions to close out the month of February, the first coupon auction of March just concluded when the Treasury sold $56BN in 3Y paper (while this was higher than the $54BN in February, it has another $2BN to go to surpass the covid record high of $56BN in 3Y paper sold in one auction) in what was a stellar auction.

The high yield of 4.256% was above last month’s 4.169%, but stopped through the 4.269% When Issued by 1.3bps, the biggest stop through since August 2023, and the 4th in the last 5 auctions.

The bid to cover was 2.604, above last month’s 2.581 but just below the six-auction average of 2.608.

The internals were more solid, with Indirects awarded 70.0% of the auction allocation (up from 66.0% last month and well above the recent average of 60.3%, and with Directs taking down 15.6%, the lowest since May 2023, Dealers were left holding just 14.40%, which was the lowest since August 2023.

Overall, this was a very strong auction yet despite the impressive showing by foreign buyers, yields barely budged on the result and if anything we have seen a modest grind higher all day, with the 10Y trading at 4.09% last, about 1bps cheaper on the day vs the Friday close.