The result of today’s 3 Year auction, coming at a time when the When Issued was printing above auction stops since April 2010, would be closely watched as a critical test of demand, particularly foreign demand, following sell-off sparked by U.S. presidential election, strategists quoted by Bloomberg said. At the same time, they added that the condensed auction schedule, December seasonality, proximity to the Dec. 14 FOMC decision and today’s oil-driven UST sell-off, which helped push UST yields above last year’s highs for the first time, may muddy the analysis.

“This month’s supply could be somewhat more challenging to underwrite relative to recent averages,” JPM strategist Jay Barry said in note

Further factors limiting foreign demand could be the recent USD strength, which has widened the cross-currency basis swap, increasing hedging costs for foreign private investors, Citi strategist Jabaz Mathai said in note. Positives for the auctions include repo value as both the 3Y and 10Y have recently traded special, indicating a short base which may support demand.

With that out of the way, here are the results as reported moments ago by the US Treasury.

The high yield on the 3Y auction printed at 1.452%, 0.1bps higher than the 1.451% When Issued, and as expected, the highest since April 2010, indicating further weakness into the auction despite the substantial short base.

The internal were just as poor, with the Bid to Cover sliding from 2.685 in November to only 2.653, the lowest since July 2009, and well below the 6 month average of 2.808.

Demand by foreigners, on the other hand, did not disappoint, with Indirects taking 42.6%, in line with last month’s auction, even if well below the 49.9% 6MMA. Directs took down 9% of the auction leaving 48.5% for Primary Dealers.

Overall, a modestly disappointing auction which came in as expected, and which was likely impacted by this week’s event calendar. And now, all eyes on both the 10Y auction later today, as well as the FOMC decision on Wednesday.