US 7-year note auction yields 5.085%, demand softer than average

• WI level at the time of the auction: 5.078%
• High yield: 5.085%
• Tail: 0.7 basis points vs the average of 0.2 basis points
• Bid to cover: 2.42X vs the average of 2.49X
• Directs: 30.27% vs the average of 23.3%
• Indirects: 57.2% vs the average of 64.6%
• Dealers: 12.53% vs the average of 12.1%

Auction grade: C−

The sale came in somewhat weaker than the norm. The tail of 0.7 basis points exceeded the 0.2-basis-point average, indicating investors demanded a modestly higher yield than the WI level ahead of the auction. Coverage ratio also lagged the historical figure. While direct bids were robust, indirect participation fell noticeably below its usual level, and dealers absorbed a slightly larger share. These outcomes push the grade to C−, just below the C that marks an average auction, although the deviations in tail and dealer share were not large.