US auctions of $62 billion of seven year notes at a high yield of 1.05%

The WI was trading at 1.04% at the time of the auction

  • High yield 1.05% versus WI level of 1.04%. The tail is +1 basis point
  • Bid to cover 2.23x versus six month average of 2.27X
  • Dealers 22.18%, versus six month average of 24.1%
  • Directs 19.45% versus six month average of 19.8%
  • Indirects 58.3% versus six month average of 56.0%

Highlights and low lights of the auction:

  • The auction required a one basis point tail above the WI level to attract buyers
  • The bid to cover was slightly lower than the six month average despite the higher yield
  • Indirects took more than what they typically do. Indirects our a proxy for overseas bidders
  • Domestic Direct bidders came in close to the 6-month average
  • The dealers were saddled with less than normal thanks to the overseas demand

Overall a grade of D to D+. 

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