US treasury auctions off $70 billion of 5-year notes at a high yield of 3.995%

• High yield 3.995%
• WI level at the time of the auction 4.005%
• Tail -1.0 basis points vs. six-month average of 0.1 basis points
• Bid to cover 2.41X vs 6 month average of 2.40X
• Dealers 11.12% versus six-month average of 12.1%
• Direct 24.8% vs average vs six-month average of 17.7%
• Indirect (international) 64.04% vs six-month average of 70.2%

Auction Grade: B

The difference between today’s five year note auction yesterday’s two year note auction was that the tail came in at -1.0 basis points. The bid to cover was also near the average.

What was the same was that the domestic buyers increase their take dramatically while the international buyers decreased their demand.

Domestic buyers accounted for 24.8% which was well above the average of 17.7%. The international buyers meanwhile took only 64.04% much lower than the 70.2% average.

The combination left the dealers with lower than normal supply at 11.12% versus 12.1% for the average.

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