3Y Auction Tails As Yield Drops To One Year Low

Starting a new month of coupon (and deficit) funding, today the Treasury sold $38 billion in 7 Year Treasuries at a high yield of 2.448%, the lowest yield since March 2018, which tailed by 0.4bps the 2.444% When Issued and followed the first "stop through" in February, after 10 consecutive tails.

The internals were in line with recent auctions: the bid to cover of 2.56 was virtually unchanged from January's 2.55 and was right on top of the 6 auction average. More notably, the Indirect takedown rebounded from last month's 45.7% print, rising to 49.5% the highest since December 2018 and above the 46.7% average, as Directs dropped sharply from 18.5% in February to just 9.4%, the lowest takedown since November, leaving Dealers with 41.1% of the auction, right on top of 41.2% 6 auction average.

Overall, a forgettable auction which placed right in line with expectations, with attention now turning to tomorrow's 10Y benchmark issue.


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