US sells USD 70bln of 5-year notes; Tail 1.4bps
- High Yield: 3.980% (prev. 3.615%, six-auction avg. 3.680%): WI 3.966%
- Tail: 1.4bps (prev. 0.7bps, six-auction avg. 0.3bps)
- Bid-to-Cover: 2.29x (prev. 2.32x, six-auction avg. 2.36x)
- Dealers: 15.61% (prev. 12.8%, six-auction avg. 10.8%)
- Directs: 22.48% (prev. 24.7%, six-auction avg. 27.5%)
- Indirects: 61.9% (prev. 62.5%, six-auction avg. 61.7%)
Context
The recent auction of USD 70 billion in 5-year notes showed a higher yield than previous auctions, which could suggest increased investor demands for compensation amid rising rates. The tail of 1.4 bps is wider than both previous outcomes and the auction average, indicating some discomfort in the bidding, evidenced by a slight dip in the bid-to-cover ratio. This could lead to upward pressure on yields, impacting interest rate expectations and potentially the broader fixed income landscape.
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