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US TSYS/SUPPLY: Review 5Y Note Auction

US TSYS/SUPPLY

Treasury futures are little changed after the $70B 5Y Note auction tails by 0.3bp, on a high yield of 3.645% vs a when-issued yield of 3.642%. The lack of market reaction befits the habitual tail for 5s, with today's marking the 6th tail in 8 auctions this year and 4 in the last 5.

The peripheral stats were more positive though: bid/cover was 2.41x, the highest since March, with the dealer takeup of just 13.2% likewise the lowest since March. Directs took down 16.3% - just a 3-month low, but one of the lowest figures since the start of 2022 (well below the 18.2% average in that time). And indirects took 70.5%, the highest since December 2023 - a potential indication of solid foreign demand.

The next 5Y Note auction is scheduled for Sept 25 ($70B expected).

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