One day after a mediocre, tailing 2Y auction, which stopped at the highest yield since September 2008, we had another mediocre bond sale by the US Treasury, in which $34 billion in 5 Year paper was just sold at a yield of 2.058%, the highest since April 2011, and a tail of 0.3bps to the When issued 2.055%. This was the 9th consecutive auction to stop out within 1bps of the When issued. The bid to cover of 2.44, was below the 6 auction average of 2.50, and lower than the 2.52 BTC in September. It was the lowest bid to cover since June 2017. 

Internals were on the sloppy side, with mixed buyside takedown figures, as a strong Direct bidder takedown helped to make up for a weak Indirect takedown. There was a 61.6% Indirect takedown, along with a Direct bidder takedown of 11.0%. The former was below the 6 auction average of 66.6%, while the latter was better than the 6MMA of 8.3%.Dealers were awarded 27.4%, the highest since April and in line with the six previous auction average of 25.1%.

Overall another mediocre auction – the second in a row – with attention now moving to tomorrow’s final 7Y “belly” buster.