US sells USD 44bln of 7yr notes; Tail 0.5bps

• High Yield: 4.175% (prev. 4.255%, six-auction avg. 3.927%); WI 4.170%
• Tail: 0.5bps (prev. 0.8bps, six-auction avg. 0.4bps)
• Bid-to-Cover: 2.51x (prev. 2.43x, six-auction avg. 2.47x)
• Dealers: 11.64% (prev. 12.4%, six-auction avg. 11.6%)
• Directs: 30.01% (prev. 25.0%, six-auction avg. 27.2%)
• Indirects: 58.35% (prev. 62.6%, six-auction avg. 61.3%)

ANALYSIS

Overall, an in-line 7-year auction. The US Treasury sold USD 44bln of notes at a high yield of 4.175%, below the prior 4.255% but above the six-auction average of 3.927%, tailing the when issued (4.170%) by 0.5bps. This was an improvement from the prior 0.8bps tail but slightly softer than the 0.4bps six-auction average.

The bid-to-cover rose to 2.51x from 2.43x and above the 2.47x average, suggesting solid overall demand. The breakdown showed a recovery in direct demand to 30.01% from 25.0%, above the 27.2% average, indicating real money participation improved.

Indirect demand fell to 58.35% from 62.6% and below the 61.3% average, while dealers were left with 11.64% of the auction, broadly in line with both the prior and the 11.6% average.

Overall, the auction was well absorbed and broadly in line with recent averages, with stronger direct demand offsetting softer indirect participation.