35 billion of 5 year notes just crossed the block to yield .90%. 42% were taken by Indirect bidders, 13% when to Direct bidders, and the other 45% landed on Wall Street. Bid to cover was a touch below average at 2.89 to 1 yet the issue was bid through the screen by .7 bps. To refresh your memory, the yield at 12:00 cst (deadline) was .907% but there were bids in the market to take all of the issue at .90% (stop out rate). Suggests good demand. Overall, it’s a “goldie locks auction”, not to hot, not to cold, but just right. Give it a B. Post auction, the 10 year note has slipped 5/32’s and mortgage backs are off 2/32’s from pre-auction levels. Stocks have cut their losses (Dow off 13 points) so it’s time to pay attention. Cautiously optimistic is how we need to roll.

Scotty

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