The Treasury sold $70 billion of five-year notes at a high yield of 5.033%, compared with a when-issued (WI) yield of 5.002% just before the auction. That is a 3.1-basis-point tail, well above the six-auction average of 0.6 basis points.

• Bid-to-cover: 2.21X versus the 2.33X average
• Direct bidders: 29.92% versus the 21.8% average
• Indirect bidders: 54.31% versus the 65.2% average
• Dealers: 15.77% versus the 12.9% average

Auction grade: D. Direct bidders stepped up, but that was not enough to offset weaker indirect demand. The lower bid-to-cover ratio and the sizable tail show that buyers required a higher yield than the market had expected to absorb the supply. Dealers were left with a larger share than average. For traders, the tail is the clearest takeaway: even with the WI yield already at 5.002%, the auction needed another 3.1 basis points to clear.

This article was written by Greg Michalowski at investinglive.com.