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5 Year Bond Auction With Highest Yield For 2015 Leads To Strong Demand, Jump In Direct Bidders
A day after the 2 Year auction surprised with solid demand all around, moments ago the US Treasury issued $35 billion in 5 Year paper which also came stronger than some had expected, pricing at a yield of 1.56%, 0.6 bps through the 1.566% When Issued. Like in yesterday’s auction, the yield was the highest of 2015. The Bid To Cover dipped modestly, dwon from 2.56 to 2.46, and in line with the 2.47 average.
The internals were more interesting, with Dealers taking down 31.6%, the least since January, while Directs ended up with 10% of the takedown, the most for this class since October. That left 58.5% to Indirect buyers, i.e., foreign central banks, who are apparently unaware they should not fight the Fed which is doing all it can to push yields across the curve higher.
In short: another better than expected auction in a world in which for all the rhetoric and posturing, when it comes to “high quality”, repoable collateral, nothing can surpass US paper, if only for now.
Source: http://silveristhenew.com/2015/05/27/5-year-bond-auction-with-highest-yield-for-2015-leads-to-strong-demand-jump-in-direct-bidders/
