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5Y Auction Preview – Yields Climbing But Still Notably Below April

US TSYS/SUPPLY
Homepagemarkets-real-timeBulletMarketsFixed Income Bullets
  • The $70bn 5Y sale at 1300ET comes after low demand for the 2Y at 1130ET with its lowest bid-to-cover since Nov’21.
  • The post-data and 2Y auction sell-off has lifted the WI yield to 4.5325% at typing, some decent intraday concession but still below the 4.659% high yield from April (despite 5Y yields having lifted some 23bps from post-CPI lows)
  • 5s30s have seen some steepening to +7bps today off last week’s low of 3bps, but 5s maintain their underperformance in recent weeks vs mid-May levels closer to 15bps.
  • Historical auction metrics: The April auction tailed by 0.4bps, similar to the 0.3bp average tail in the latest five auctions.
  • The bid-to-cover was 2.39x in April (poking to lowest since Jan) and with a five-auction average of 2.41x.
  • Primary dealers took 15.0% in Apr (15.8% average), indirects took 65.7% (66.3% average) and directs took 19.2% (18.0% average).
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  • The $70bn 5Y sale at 1300ET comes after low demand for the 2Y at 1130ET with its lowest bid-to-cover since Nov’21.
  • The post-data and 2Y auction sell-off has lifted the WI yield to 4.5325% at typing, some decent intraday concession but still below the 4.659% high yield from April (despite 5Y yields having lifted some 23bps from post-CPI lows)
  • 5s30s have seen some steepening to +7bps today off last week’s low of 3bps, but 5s maintain their underperformance in recent weeks vs mid-May levels closer to 15bps.
  • Historical auction metrics: The April auction tailed by 0.4bps, similar to the 0.3bp average tail in the latest five auctions.
  • The bid-to-cover was 2.39x in April (poking to lowest since Jan) and with a five-auction average of 2.41x.
  • Primary dealers took 15.0% in Apr (15.8% average), indirects took 65.7% (66.3% average) and directs took 19.2% (18.0% average).