After last month's unexpectedly strong 2Y auction which saw a surge in foreign central bank demand, the just concluded sale of $40 billion in 2Y paper was less exciting, even if it did have its moments.
The high yield of 2.355% rebounded from March's 2.273%, which was the lowest since February 2018, and also printed "on the screws" with the When Issued, confirming solid demand at auction time.
The bid to cover dipped modestly from 2.60% last month to 2.51% and just below the 2.55% six auction average.
The internals were likewise weaker than last month, as the Indirects dropped from 56.0% in March to 47.7% in April, which however was right on top of the six auction average; and as Directs rose modestly from 13.3% to 15.8%, above the 14.6% average, Dealers were left with 36.5%, a sizable increase from the 30.7% last month.
Overall it was a mediocre auction, which may indicate that bond traders are just as clueless about the future trajectory of the short-end as the Fed itself.