US treasury auctions off $52 billion of 5 year notes at a high yield of 4.899%

<p>The US treasury auctioned off the $52 billion a 5 year note at a high yield of 4.899%</p><ul><li>WI level at the time of auction was 4.88%</li><li>Tail 1.9 basis points. The six-month average was -0.4 basis points</li><li>Bid to cover came in at 2.36Xversus six-month average of 2.99X</li><li>Dealers 19.4% versus six-month average of 12.3%</li><li>Directs (a measure of domestic demand) 19.1% versus a 6 month average of 18.8%</li><li>Indirects (a measure of international demand) 61.5% versus six-month average of 68.9%</li></ul><p>Auction Grade: D-</p><p>The 5 year auction was horrible. The auction had a positive 1.9 basis point tail. The Bid to cover was well below the 6 month average. Domestic demand as measured by direct bidders was near the six-month average, but international demand was well below the 6 month average (and the prior of 71.1%). </p><p>Dealers take up the slack and were settled with 19.4% well above the six-month average of 12.3%. </p><p>Yuck!</p><p>Yields have moved up after the results</p><ul><li>2-year yield 5.1 to 2% +5.2 basis points</li><li>10-year yields are trading at 4.950% up 11.1 basis points</li><li>30-year yield 5.090% up 12.8 basis points</li></ul>

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