US Treasury auctions $58B of 3 year notes at a high yield of 3.440%

High Yield:3.440%

• Previous: 3.81%

WI Level at the time of the auction: 3.457%

Tail: -1.7 bs

• Previous: -0.2bps

• Six-auction average: 0.1bps

Bid-to-Cover: 2.66X

Dealers:10.45%

Directs (a measure of domestic demand):11.3%

Indirects (a measure of international demand):78.24%

AUCTION GRADE: A

Details: The International buyers showed up and crowded out the other bidders. The international buyers took 78.24%. That was well above the 64.7% six-month average. As result, domestic buyers only to 11.3% well below the six-month average of 18.8%.

The international demand was evident from the -1.7 basis point tail. The tail is the difference between the WI level at the time of the auction and the high yield. That compares very favorably to the +0.1 basis point tail seen over the last six months.

The bid to cover was stronger as well at 2.66X vs 2.56X average.