Record Three, Six-Month Bill Auctions Sell Without A Glitch

The market was closely watching today's record 3 and 6 month bill auctions, which as noted earlier come at record amount of $51BN for the 3M and $45BN for the 6M. And with the auctions just concluded, it appears that the market had no problems digesting the massive supply:

  • The 3 Month yielded 1.63%, below the 1.64% when issued.
  • The 6 Month yielded 1.82%, also below the 1.84% When Issued.

That said, the yields on both were well higher than last week, with the 3M up 6bps vs last week, while the 3M was up 3.5bps compared to last week's auction. Putting the auction in context, this was the highest 3M auction yield going back to 2008.

The internals were somewhat mixed, however, with the BTC on the 3M sliding from 3.12 last to 2.74...

... while the 6M was a mirror image, rebounding from last month's 2.74 to 3.11

Some more details on the internals, first the 3M, which saw a jump in Indirect bidders"

  • 3M Primary dealers awarded 53.5% vs six previous auction average 55.0%
  • 3M Direct bidders awarded 5.9% vs six previous auction average 8.3%
  • 3M Indirect bidders awarded 40.6% vs six previous auction average 36.8%

The same surge in indirects was also present at the 6M, where foreign buyers were awarded a whopping 60.1% vs a 6 month average of 41.7%

  • 6M Primary dealers awarded 36.8% vs six previous auction average 53.3%
  • 6M Direct bidders awarded 3.1% vs six previous auction average 5.0%
  • 6M Indirect bidders awarded 60.1% vs six previous auction average 41.7%

Overall, a solid auction despite the modest drop in the 3M BTC, which then takes us to the balance of today's issuance at 1pm, when the Treasury will sell $55BN in 4 week bills and $28BN in 2 Year Notes.