The U.S. Treasury sold $69 billion of 2-year notes at a high yield of 4.204%, below the pre-auction level. International buyers stepped up as domestic demand lagged, and the sale drew an overall grade of B+.
The Treasury completed the first coupon auction of the week, selling $69 billion of 2-year notes at a high yield of 4.204%. That came in below the when-issued level of 4.208% recorded at the time of the auction.
The tail, the gap between the high yield and the WI level, came in at -0.4 basis points versus the six-month average of +0.2 basis points, a modestly stronger result than usual. The bid-to-cover ratio landed at 2.60 times, close to the six-month average of 2.61 times.
Demand skewed toward international buyers. Direct bidders took 23.1% of the auction, below their 30.1% average. Indirect bidders, largely foreign institutions, absorbed 66.0% versus their 56.9% average. Dealers were left with just 10.9% of the notes, under their 13.0% average.
InvestingLive reported that domestic demand came in below average: "The domestic bidders did not show up with below average demand". That left dealers with a lower takedown than usual, and the auction earned an overall grade of B+.
The Treasury still has two coupon auctions left this week. It will sell 5-year notes on Wednesday and 7-year notes on Thursday to round out the week's issuance.
Source: InvestingLive
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