Finance

Poor 2Y Auction Tails At Highest Yield Since 2007 As Foreign Buyers Flee

Poor 2Y Auction Tails At Highest Yield Since 2007 As Foreign Buyers Flee

We start today’s two-fer auction special day (there is a 5Y auction at 1pm), with another nosebleeding 2Y auction yield.

Moments ago the Treasury sold $46 billion in 2Y paper at a high yield of 3.084%, tailing the When Issued 3.077%, and the highest yield since December 2007. Just as notably, with the exception of a brief reversal in April, this was the 11th consecutive higher 2Y auction high yield.

The bid to cover of 2.509 was the lowest since March, printing below last month’s 2.607%, and was well below the six-auction average of 2.63.

The internals were also disappointing, with Indirects taking down just 51.5%, the lowest since November’s 45.6%; and with Dealers holding on to 23.2% of the auction, the most since January (with QE over they will have trouble disposing of this paper), Directs were awarded 25.3%, the most since March, and well above the 18.6% recent average.

Overall, this was a disappointing 2Y auction which was somewhat unexpected in light of the sharp concession today which saw yields spike as futures rose.

And now we look for the day’s main event: the sale of $40BN in “bellybusting” 5Y paper at 1pm.

Tyler Durden
Mon, 06/27/2022 – 12:02

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