Average 7Y Auction Stops On The Screws Amid Stock Rout

After yesterday’s mediocre 5Y auction, we had just one coupon sale left: 7Y paper at 1pm today. And with today’s wholesale post-Nvidia, risk-off move it was expected to be an easy sale, which is more or less what it was.

The Treasury sold $44 billion in 1 Year notes at a high yield of 3.790%, down sharply from 4.018% last month, and the lowest since November. The auction also priced on the screws with the When Issued, which was also at 3.790%. It followed 5 auctions in the past 6 months which tailed so relatively speaking, an improvement. 

The bid to cover was 2.498, up from 2.454 and also over the recent average of 2.461.

The internals were a bit weaker, with Indirects awarded 63.6%, down from 66.9% in January but above the recent average of 62.6%. And with Directs taking down 26.91%, which was right in line with the six-auction average, Dealers were left with 10.4%, a small drop from last month’s 10.9%. 

Overall, this was a solid, if hardly, stellar auction, with average foreign demand and mediocre metrics, which in itself is rather surprising since the money from the equity selling has to be going somewhere and bonds should be seeing more demand, if only in theory.