If yesterday's 2Y auction was ugly, with poor bidside demand, today's 5Y was at worst average.
Moments ago, the Treasury sold $35B in 5Y paper, the most for a single 5Y auction since Jan 2016, at a high yield of 2.837%, stopping through the When Issued 2.838% by 0.1bps and more than 20bps higher than the 2.612% yield in March. This was the highest yield since September 2008, and is where the 10Y yield was trading exactly one week ago.
The internals showed a modest improvement, with the Bid to Cover virtually unchanged at 2.49, down from 2.50 last month, if above the 6 auction average of 2.45. What is more interesting is that Direct bidders took down 13.7% of the auction, vs 8.3% last auction, 10.1% in the prior six, and the highest Direct award since August 2014. Indirects, meanwhile, dipped from 63.5% in March to 60.2% (and below the 62.0% 6 month average) leaving Dealers holding 26.2% of the auction, a little below the 6 auction average of 27.9%.
Overall, an average auction, one which had little impact on the rest of the curve, or the pricing of 5Y paper itself in the open market.