US Treasury 2-year note sale raises $69 billion at 4.708% high yield

• The high yield was 4.708%.
• At auction time, the when-issued (WI) level stood at 4.705%.
• The tail measured 0.3 basis points, compared with the average stop-through of 0.2 basis points.
• The bid-to-cover ratio came in at 2.59 times, versus the average of 2.64 times.
• Direct bidders took 41.32%, well above the average of 30.4%.
• Indirect bidders accounted for 45.68%, below the average of 58.3%.
• Dealers received 13.0%, slightly above the average of 11.3%.

The auction received a grade of C−.

This auction performed slightly below the typical level. The high yield exceeded the when-issued level by 0.3 basis points, indicating that buyers required a small yield premium to take down the supply. The bid-to-cover ratio was also a bit lower than usual. The composition of bidders showed a notable change: indirect participation dropped to 45.68%, while direct bidders increased their share to 41.32%. This stronger direct demand offset some of the shortfall, yet dealers ended up with a proportion above the norm. Overall, the auction was soft, though the small tail and the slight underperformance in bid-to-cover prevent it from being classified as a very weak outcome.