U.S. Treasury auctions off $34 billion of 10 year notes at a high yield of 2.720%

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  • The WI level at the time of the auction was 2.69%

The U.S. Treasury auctioned off $34 billion of 10 year notes:

  • Bid to cover 2.43X versus six month average of 2.50X
  • Directs (a measure of domestic demand) 17.9% versus a six month average of 16.5%
  • Indirects (a measure of international demand) 64.3%% versus a six month average of 70.9%
  • Dealers (they take the rest) 18.66% versus a six month average of 12.7%

The last auction came in at a high yield of 1.920% with a tail of 0.3 basis points. The six month averages for tails is -0.2 basis points.

Auction grade: F

Lowlights:

  • Tail of 3 BPS vs an average of -0.2 bps
  • Directs were the only bright spot at 17.9% above the 6 month average but it did take 3 bp tail too
  • Indirects were much lower than the 6-month average. So international investors did not show up
  • Dealers are saddled with well above the six month average

CNBCs Santelli gave it a D- grade. He was generous.

CNBC
Rick Santelli gave the auction a D-

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