US treasury to auction off $70 billion of 5-year notes at top of the hour

The second coupon auction of the day will take place at 1 PM ET, when the US treasury auctions off $70 billion of five year notes.

Earlier today, the treasury sold $69 billion of 2-year notes with a tail of 0.8 basis points. The bid to cover was less than the 6-month average. The overseas investor demand was light at 58.23% versus 67.1% average.

For the 5-year auction, the success or failure will be based on the six-month averages of the major components. That includes:

• Tail 6-auction avg. 0.5bps

• Bid-to-Cover 6-auction avg. 2.37x

• Dealers 6-auction avg. 14.4%

• Directs (a measure of domestic demand) 6-auction avg. 17.6%

• Indirects (a measure of international demand) 6-auction avg. 68.0%

The High Yield at the last auction came in at 3.519%. The current five year yield is up at 4.120% much higher than a month ago.

This article was written by Greg Michalowski at www.forexlive.com.