U.S. Treasury auctions off $44 billion of 7 year notes at a high yield of 3.953%
- WI level at the time of the auction 3.947%
- Tail +0.6 basis points vs 6 month average of -0.7 basis points
- Bid to cover 2.40X versus 6 month average of 2.60X
- Directs 31.6% vs 6 month average of 22.2%
- Indirects 56.4% vs 6 month average of 68.1%
- Dealers 12.0% versus 6 month average of 9.7%
Auction Grade: D+
Not a great auction for a off the run coupon issue. Comparing to the 6 month averages, the bid to cover was much less than the average, the international demand was very week at only 56.4% (versus 68.1% average). The tail was positive when the average has been negative. Dealers were saddled with a larger percentage. The bright spot was that domestic demand was stronger 31.6% (versus 6 month average of 22.2%).
Overall it's less than a C grade. Is it a C- or D+, I am going with the D+.
