If yesterday's 5 Year auction was largely unremarkable, today's issuance of $29 billion in 7 Year paper [3]was downright weak. Of note: the high yield of 2.058% tailing well above, or nearly 1 basis point wider, compared to the When Issued which was trading at 2.049%. This was the largest tail since June 2012 according to SMRA calculation. Additionally while the 2.46 Bid To Cover was not a new four year low, it was the second lowest since May 2009, and only better compared to last month's 2.43 BTC in the August revulsion of an auction. The internals were less exciting with Directs taking down 17.8%, Indirects 42%, and the balance, or 40.21% going to Dealers. Over all, a very weak auction and the Bid to Cover rate is most certainly continuing its downward trajectory now that the future of Fed TSY backstops in perpetuity is in question.
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