The US Treasury will auction $44 billion worth of seven-year notes at the last minute. The auction will close the issuance of coupons for the week. The two- and five-year note options were midway. Yields are higher today after higher US GDP inflation data, but off the day’s highs. Nonetheless, yields are at their highest levels of the year across the entire curve.
Below is a review of the major components from the latest 7-year auction, along with the six-month averages for those components. Auction results will be compared to these components.
High efficiency:
- Previous: 4.185%
- Average over six auctions: 4.298%
Tail (tail is the difference between the WI level just before the auction and the high yield auction. A negative tail indicates a strong bid):
- Previous: -0.8 basis points
- Average over six auctions: +0.65 basis points
Bid-to-Cover (Bid to Cover is the number of investor bids relative to the supply of tickets on sale. A higher number indicates greater demand):
- Previous: 2.61X
- Average over six auctions: 2.57X
Dealers (Dealers provide liquidity and provide a safety net in case of lower than expected domestic and international demand. A high percentage indicates low demand from normal investors.:
- Previous: 12.9%
- Average over six auctions: 15.1%
Directs (Directs are a measure of U.S. domestic demand. A number above the six-month average indicates strong domestic demand):
- Previous: 17.4%
- Average over six auctions: 17.1%
Indirects (Indirects are a measure of international demand. A number above the six-month average indicates strong foreign demand for the issuance. The vast majority of U.S. debt is sold to foreign investors):
- Previous: 69.7%
- Average over six auctions: 67.8%
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