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Disappointing 5Y Auction Tails As Yield Jumps To 16 Month High

Courtesy of ZeroHedge View original post here.

For the second day in a row, today's Treasury auction of $61BN in 5 year paper, has come in quite weak in the aftermath of last week's hawkish FOMC pivot.

One day after we got a tailing, disappointing 2Y auction, we got a carbon-copy only this time at the 5Y tenor, when the US sold the latest batch of 5Y paper at a high yield of 0.904%, a sharp jump from last month's 0.788%, the highest 5Y auction yield in 16 months since the pre-covid Feb 2020 auction, and a 0.2bps tail to the When Issued 0.902%.

The bid to cover dropped from last month's impressive 2.49 to just 2.36 which was right on top of the six-auction average.

The internals were more disappointing, with Indirects demand sliding from 64.4% in May to just 57.6%, the lowest since February's 57.1% and below the six-auction average of 59.2%. And with Directs taking down 18.1%, the most since Dec 2020, Dealers were left with 24.3% of the final allocation, just below the recent average of 24.3%.

In summary, a subpar, tailing auction which pushed 10Y yields to session highs, yet nowhere near as bad as February's 7Y disaster. And speaking of 7Y auctions, the 24 hour countdown to tomorrow's begins now.


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