While yesterday's 2 Year auction was well stronger than expected, moments ago the Treasury sold $35 billion in 5 Years in an auction that [3]came quite mixed: the High Yield printed at 1.67%, or the highest since June, it tailed 0.5 bps to the 1.665% When Issued. Perhaps showing the flattening of the curve on the short end, while yesterday's 2Y closed at the highest yield since May 2010, today's 5Y was only the highest since June, when a comparable auction yielded 1.71%.
And while the bid to cover rebounded modestly from 1.415 to 1.67, the Indirect bid dropped to 56.7%, the lowest since August. Offseting this was the Direct bid which at 10.1% was the highest since October 2014.
Overall a confused auction, and one which sets up tomorrow's 7 Year as one which can go in any direction.
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