One month after the US Treasury sold $32 billion in 2Y notes in an ugly, tailing auction and a sharp drop in the bid to cover, just barely on the south side of 2.50% resulting in a cash coupon of 2.375%, moments ago the US Treasury sold $32 billion in 2Y paper - the same amount as last month, and tied for the highest monthly issuance for this tenor since April 2014 - however with one notable difference: the high yield was 2.590%, stopping through the When Issued 2.595% by 0.5bps, and the highest since July 2008; more importantly, this was the 2.50% cash coupon 2Y Treasury since late 2008.
Perhaps as a result of coupon chasers coming in, the internals were better than last month, with the Bid to Cover jumping from from 2.61 to 2.88, above the 6 auction average of 2.78.
Directs bidders were awarded 15.34%, the same as last month and fractionally above than the 6 auction average of 15.0%, although Indirects continued to show little enthusiasm for 2Y paper, taking down just 39.3% well below the 45.4% 6 auction average. This was also the lowest Indirect award since December 2016. Offsetting this lack of foreign interest, was a jump in the Dealer award, which took down 45.4% of the auction, the highest since last December.
Overall, a better auction than last month, if still lackluster, and nothing to write home about, which perhaps makes sense in a week in which the Treasury will sell a combined $99 billion in fixed-rate notes this week, in some of its largest offerings since 2010, with yields at the highest in years.