After yesterday’s 2 Year auction, moments ago the Treasury sold its second coupon for the week when it auctioned off $70BN in 5 Year paper in a rather lackluster auction.
The auction priced at a high yield of 3.615%, down from 3.823% a month ago, and the lowest since November; it also tailed the When Issued 3.608% by 0.7bps, the biggest tail since last July.
The bid to cover was ugly, dropping to 2.32, down from 2.34 and the lowest since July 2025.
The internals were fractionally better, with foreign demand clearly there as Indirects took down 62.5%, up from 60.7% and the highest since October. And with Directs awarded 24.7%, down from 28.5% and the lowest since October, Dealers were left holding 12.8%, up from 10.8% last month and above the recent average of 10.1%.
Overall, this was a subpar auction, with a surprisingly big tail and sliding bid to cover, yet it could have been far worse if foreign bidders did not show up. Luckily, they did, and prevented a much worse outcome.
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