After last month's 2 Year auction, which priced at the highest yield since 2011, but a matching jump in the Bid to Cover, which at 3.564 was the highest since February, today's just completed issuance of $29 billion in non-POMOable 2 Year paper showed a big drop in yield, sliding to 0.425%, stopping through the 0.429% When Issued. Offsetting the drop in yield, however, was the Bid To Cover, which dropped to just 3.113, the lowest since September 2013, thus making any firm determination of interest complicated. Furthermore, while the Directs took 47.16%, or above the 42.98% in the prior month, this was below the TTM average of 49% and the second lowest since March. Is the lack of the free POMO flip put going to force the Dealer bid lower? We dont need to know the answer for now as Directs picked up 16.19%, or the most since June, while Indirects were left holding 36.6%, well above the 29.2% TTM Average.
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Altogether, an unremarkable auction in a week where the longer-maturities will be far more closely watched, especially after tomorrow once the FOMC announcement is in the history books.
