In many ways, the just concluded sale of $34 billion in 5Y paper was a carbon copy of yesterday's 2Y auction.
Just like yesterday, the auction tailed modestly, and pricing at a yield of 1.95%, today's auction was 0.5% bps wide of the 1.945% When Issued. This was the third consecutive tail in a row for this tenor, and while the high yield rose from last month's 1.931% it was well below the 2.06% yield of the December 2016 auction.
However, like yesterday, the internals were stronger than the modest tail revealed. First, the bid to cover of 2.37 was higher than last month's 2.29, if fractionally below the 6 previous auction average of 2.45. Then, looking at the bidding composition, we find that like yesterday, Indirect appetite rose again, with foreign bidders taking down 68.9% of the auction, more than 10% higher than in February, and above the 6 month average of 62.3%. With Directs taking down 4.8%, in line with the recent average of 5.2%, it means that Dealers were left holding 26.4% of the auction.
Overall, another auction, which was either good or bad, depending on how one looks at it.