U.S. Treasury auctions off $39 billion of 10 12 months notes at a excessive yield of 4.362%

• High-yield 4.362%
• WI level at the time of the auction 4.365%
• Bid to cover 2.61X versus six month average of 2.56X
• Tail -0.3 basis points basis points versus six month average of -0.7 basis points
• Directs (domestic buyers) 23.7% vs six month average of 16.3%
• Indirects (international buyers) 65.4% vs six month average of 71.7%
• Dealers 10.87% vs six month average of 12.0%

Auction Grade: B-

The bid-to-cover was a touch higher than the average. The tail was negative but not as good as the six-month average.

Domestic buyers were strong compared to the average but international investors were weaker.

The dealers were saddled with less than average.

SUMMARY: The domestic and international buyers reversed demand, but the dealers were less than normal. That gave the overall auction grade an upward bias. Grade: B-

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