The US treasury will auction off $60B of 2-year notes at 1 PM ET. The auction is the first of the 3 coupon auctions this week. Tomorrow, 5-year notes will be auctioned. On Thursday, the treasury will auction 7-year notes.
Below are the major component details of the last and the 6-month averages The auction results, will be compared to the 6-month averages to determine strong or weak demand. If the auction is strong, yields should move lower. Conversely, if the auction is weak, yields should continue its move higher.
High Yield:
- Previous: 4.314%
- Six-auction average: 4.860%
Tail: The tail is the difference between the yield at the time of the auction (or WI level) and the actual high yield at the auction. A negative tail is indicative of strong demand. A positive tail is indicative of weak demand):
- Previous: -0.6 basis points (bps)
- Six-auction average: 0.1 bps
Bid-to-Cover: The Bid to cover is the number of bids vs the amount auctioned.
- Previous: 2.68x
- Six-auction average: 2.7x
Dealers: The dealers bid and take the balance that the domestic and international bidders do not get at the auction.
- Previous: 18.6%
- Six-auction average: 16.9%
Directs . Direct represent domestic US buyers:
- Previous: 19.5%
- Six-auction average: 20.8%
- Indirects: Indirects represent international buyers. At over 60% they represent the largest buyers of US debt instruments:
- Previous: 61.9%
- Six-auction average: 62.3%