Unlike last month's stellar 3Y auction, today's sale of $44 billion in 3 year paper, the first auction of the QT era (if not really because the first actual TSY maturity does not take place until June 15), was mediocre at best.
Starting at the top, the high yield of 2.927% was above May's 2.809% by 12bps, the highest since Nov 2018 and also tailed the When Issued 2.917% by 0.1 basis point, the first tail since march, and only the second tail for a 3Y auction of 2022.
The bid to cover of 2.453 was well below last month's 2.595 but in line with the six-auction average of 2.470%.
The internals were uglier: Indirects, or foreign buyers, took just 51.5%, down from 62.0% last month and the lowest since October. And with 24.9% Dealers, on top of the six-auction average of 2.470%, Directs ended up holding 23.6%, well above last month's 18.0% and the recent average of 16.5%, and was the highest going back all the way back to December 2018.
Overall, a mediocre auction, which however was to be expected with yields sliding all day and vaporizing any buyer concessions; certainly nothing too ugly that a solid 10Y auction tomorrow won't help markets forget.