U.S. Treasury auctioned off $54 billion of 2-year notes at a high yield of 4.887%

<p>The US treasury&nbsp;auctioned off $54 billion of two-year notes:</p><ul data-v-2b84ef95=""><li data-v-2b84ef95="">High-yield 4.887%</li><li data-v-2b84ef95="">WI&nbsp;at the time of auction 4.876%</li><li data-v-2b84ef95="">Tail:&nbsp; 1.1 basis points versus 6-auction average of -0.4 basis points.</li><li data-v-2b84ef95="">Bid-to-Cover Ratio: 2.54X versus 6-auction average of 2.79x.</li><li data-v-2b84ef95="">Dealers: 18.76% versus 6-auction average of 15.6%.</li><li data-v-2b84ef95="">Directs: 23.9% versus 6 average of 19.2%.</li><li data-v-2b84ef95="">Indirects: 57.4% versus 6 -auction average of 65.2%.</li></ul><p>Auction grade:D+</p><p>The 2 year note auction was met with poor international demand.&nbsp;The domestic demand was actually stronger than expectations, but overall, the bid to cover was less than the 6-month average. The dealers are saddled with more than the 6-month average, and a tail of 1.1 basis points was needed to sell the issue. That compares to a 6 month average of -0.4 basis points. So overall it was a loser of an auction.</p><p>One issue might be the amount of supply coming to the market today. In addition to auctioning to your notes, the U.S. Treasury sold $73 billion a 6-month bills, and will sell&nbsp;$55 billion of 5-year&nbsp;notes at 1 PM ET.. Tomorrow the treasury auctioned off 7 year notes.<br></p><p>Although the auction was not very good, yields remain negative on the day:</p><ul><li>2 year yield 4.918% -4.1 basis points</li><li>5 year yield 4.454% -4.8 basis points</li><li>10 year yield 4.435% -4.9 basis points</li><li>30 year yield 4.579% -3.8 basis points<br></li><br></ul>

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