"Average", Tailing 5Y Auction Sees Solid Support From Foreign Buyers

In today's second auction, the Treasury sold $34 billion in 5 year paper, and like this morning's 2Y auction, the results were rather lackluster, with the paper stopping at a high yield of 2.066%, above last month's 2.055%, and the highest since April 2011, and just like the earlier 2Y sale, this auction also tailed the When Issued of 2.064% by 0.2bps. 

The internals were unremarkable, with the bid-to-cover of 2.46, just barely higher than October's 2.44 but slightly below the six previous auction average of 2.52, astotal bids of $85.5bn competed for $35.8bn in notes sold vs the six auction average of $88.7bn in bids for $37.0bn for sale.

However, unlike the previous auction, this time demand from foreign bidders was solid, with Indirects awarded 65.8% of the auction, higher than the 61.8% last month, and just under the 6 month average. Directs took down 11.4%, more than the 11.0% last month and the 9.3% 6 month average, while Dealers were awarded 22.8%, the lowest since August, and below the 6 month average of 23.4%.

Overall, an unremarakable auction, or as Stone McCarthy called it "average", if slightly stronger than the 2Y paper sold earlier, as investor demand continues to shift to longer-maturity paper on concerns the Fed will keep rising rates, pushing the short-end progressively higher.