US sells USD 28bln of 2-year FRNs at high discount margin of 0.055% (prev. 0.05%)

• High Discount Margin: 0.055% (prev. 0.05%, six-auction average 0.09%)
• B/C: 3.14x (prev. 3.37x, six-auction average 3.19x)
• Dealer: 33.08% (prev. 36.77%, six-auction average 36.98%)
• Direct: 0.36% (prev. 0.00%, six-auction average 0.24%)
• Indirect: 66.56% (prev. 63.22%, six-auction average 62.78%)

Two-year FRN results are read on the discount margin rather than the yield, since the coupon resets off the bill rate and the margin is the only fixed spread the buyer locks in. A high margin wider than the prior auction but well inside the six-auction average is a modest tail by this series' standards, and the allocation pattern matters more than the pricing: indirects taking a larger share with dealers left holding less is the signature of end-demand clearing the supply rather than the street warehousing it. FRN demand is driven chiefly by money market funds and other floaters buyers whose appetite tracks the expected path of the front end; when rate-cut expectations fade and bill yields stay elevated, floaters stay attractive and margins compress, while the reverse holds when cuts are being priced. The weaker bid-to-cover against the prior auction sits against that, though it remains near the series average. Worth watching is whether the margin trend across successive FRN auctions drifts with bill supply and front-end repricing, and how this result sits alongside the week's coupon auctions in the same maturity bucket, since the two-year note sale is the more telling read on rate expectations.