Today's 2 Year auction was not expected to be exciting, and it wasn't. Pricing at 0.392%, the auction tailed the 0.39% When Issued by 0.2 bps - the first tail since June - but was well below last month's 0.447%, and the lowest yield since February's 0.34%. The flipside is that the Bid to Cover of 3.519, higher than last month's 3.345 was also the highest since February's 3.605, and well above the TTM average of 3.29. It appears the trend of declining BTCs has finally broken. The internals were perhaps a little more exciting: Directs took down 25.23%, above the 18.96% last month, and the highest in 2014, above the 21.3% TTM average. Alternatively, indirects were left with 18.86%, below the 23.36%, and certainly well below the 40.93% from March, making the number the lowest Indirect takedown since January of 2013. The remaining 55.91% went to the Dealers, which was just a tad below the 57.7% from April, if above the 51.1% TTM average.
Summarizing the auction, there is hardly much if any fear that the "dots" will shoot up to 4% some time in 2016 when the bond matures and those who bought at auction today are left underwater.
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