The U.S. Treasury will auction off $52 billion 5-year notes at the top of the hour.
Note that the coupon auctions are judged by investor demand. The 2 year note auction yesterday it was met with ok demand. There was no tail.
Of late the auctions have been sloppy with larger tails (the difference between the WI or When Issued level right before the auction vs the actual high yield). A positive tail is indicative of a weak demand.
The following are the previous and the 6 month averages of the major components:
- Tail: bps (prev. -1.2bps, six-auction avg. -0.4bps)
- Bid-to-Cover: x (prev. 2.52x, six-auction avg. 2.99x)
- Dealers: % (prev. 11.2%, six-auction avg. 12.3%)
- Directs: (a measure of domestic demand) % (prev. 17.6%, six-auction avg. 18.8%)
- Indirects (a measure of international demand): (prev. 71.1%, six-auction avg. 68.9%)