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US TSYS/SUPPLY: Preview 7Y Note Auction

US TSYS/SUPPLY
  • Tsy $44B 7Y-Note auction (91282CLM1) is at the top of the hour, WI currently running around 3.667%, 10.3bp rich to last month's tail.
  • August auction recap: Last month's 7Y Note auction tailed by 1.0bp, on a high yield of 3.770% vs a 3.760% when-issued yield. Initial Treasury market reaction was slightly negative but the knee-jerk move fully reversed.
  • This was the first tail for the 7Y in 3 months and just the 2nd in the last 7, and came with mixed peripheral statistics. On the less encouraging side, dealers took down 13.7%, above the 5-auction average of 12.9% and a sizeable jump from 8.9% in July, with the bid/cover of 2.50x below the 2.55x average.
  • However, the indirect takeup remained strong for the second consecutive auction at 75.1% from 74.4% in July and for the highest since August 2023. As we noted for the 5Y Wednesday, which saw its highest indirect takeup since December 2023, a potential indication of solid foreign demand ahead of the Fed's easing cycle.
  • Timing: The 7Y note results will available shortly after the competitive auction closes at 1300ET.
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  • Tsy $44B 7Y-Note auction (91282CLM1) is at the top of the hour, WI currently running around 3.667%, 10.3bp rich to last month's tail.
  • August auction recap: Last month's 7Y Note auction tailed by 1.0bp, on a high yield of 3.770% vs a 3.760% when-issued yield. Initial Treasury market reaction was slightly negative but the knee-jerk move fully reversed.
  • This was the first tail for the 7Y in 3 months and just the 2nd in the last 7, and came with mixed peripheral statistics. On the less encouraging side, dealers took down 13.7%, above the 5-auction average of 12.9% and a sizeable jump from 8.9% in July, with the bid/cover of 2.50x below the 2.55x average.
  • However, the indirect takeup remained strong for the second consecutive auction at 75.1% from 74.4% in July and for the highest since August 2023. As we noted for the 5Y Wednesday, which saw its highest indirect takeup since December 2023, a potential indication of solid foreign demand ahead of the Fed's easing cycle.
  • Timing: The 7Y note results will available shortly after the competitive auction closes at 1300ET.