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7Y Auction Review: Largest Tail In A Year

US TSYS/SUPPLY
  • The $39B of 7Y supply tailed by a large 2.1bps (high yield 4.399% vs WI 4.378%), the most since 2.8bp in Nov 2022.
  • It follows a modest 0.2bp trade through last month with a 5-auction average of 0.1bp trade through after some particularly mixed August and July auctions.
  • Details were suitably weak, with the bid-to-cover of 2.44x (lowest since April) following 2.70x in Oct and an average 2.59x.
  • Primary dealer uptake increased to 20.3% vs an average 11.6%, also to its highest since Nov 2022.
  • Rounding results out, directs took 15.85% vs an average 17.15% and indirects took 63.9% vs 71.3%.
  • Treasuries pared earlier gains on the weak auction but have already retraced most of the reaction – 5Y yields lifted almost 2bps on the results but now sit just 0.5bp higher for still -6.8bps on the day.

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