Solid 3Y Auction Stops Through Ahead Of Tomorrow's CPI Report

Ahead of tomorrow's CPI report (which will come in tame thanks to continued housing disinflation), moments ago the US Treasury sold its first refunding auction, which came in very strong, stopping through the When Issued, and with above par metrics.

Pricing at a high yield of 4.291%, up from 4.179% in July and the highest since Feb 2025, the auction stopped through the When Issued 4.296% by 0.5bps, the 2nd consecutive through auction.

The bid to cover rose to 2.712, up from 2.600 and the highest since November; it was obviously well above the six-auction average of 2.606.

The internals were also solid, with Indirects awarded 64.24%, down slightly from 67.50% last month but in line with the recent average of 3.729%. And with Directs awarded 24.0%, well above the average of 21.7%, Dealers were left holding just 11.7%, one of the lowest Dealers this year. 

Overall, this was a rock solid auction, and it should eliminate any concerns that the bond market (at least) is worried about tomorrow's CPI print (as in coming in much hotter than expected).