The U.S. Treasury will auction off $70 billion of 5 year notes at the top of the hour. Yesterday, the auction off to your notes with average demand. The auction will be compared to the 6 month averages of the major components to determine either strong or weak demand.
The six-month component averages shows:
- Tail 0.3 basis points.
- Bid to cover 2.36X
- Directs 24.9%. (Measure of domestic demand)
- Indirects 64.7% (measure of international demand)
- Dealers 10.4% (the dealers generally take the residual supply)
The last 5 year note auction was at 3.625%. The current 5 year yield is at 3.565%.
