The US treasury sells $46 billion of 3-year notes at a high yield of 4.74%

<ul><li>High Yield: 4.740%<ul><li>Previous: 4.660%</li><li>Six-Auction Average: 4.217%</li></ul></li><li>WI at the time of the auction: 4.723%</li><li>Tail: 1.7 basis points<ul><li>Previous: 1.0 bps</li><li>Six-Auction Average: -0.6bps</li></ul></li><li>Bid-to-Cover: 2.56X<ul><li>Previous: 2.75x</li><li>Six-Auction Average: 2.79x</li></ul></li><li>Dealers: 22.09%<ul><li>Previous: 20.2%</li><li>Six-Auction Average: 14.8%</li></ul></li><li>Directs: (a proxy for domestic demand): 21.94% <ul><li>Previous: 22.1%</li><li>Six-Auction Average: 19.0%</li></ul></li><li>Indirects: (a proxy for international demand): 55.97%<ul><li>Previous: 57.7%</li><li>Six-Auction Average: 66.2%</li></ul></li></ul><p>AUCTION GRADE: F</p><p>Both domestic and international demand was light. The bid to cover was much lower than the six-month averages. There was a high tail 1.7 basis points. </p><p>The bad auction is something to pay attention to going forward and could lead to higher rates as the US auctions off more debt, but investor demand (especially from foreign sources) slows. </p>

This article was written by Greg Michalowski at www.forexlive.com.