Stellar 2Y Auction Sees 2nd Highest Indirects On Record

The week’s first coupon auction is in the history books and it’s out with a bang: moments ago the Treasury sold $42BN in 2Y paper in a stellar auction with metrics that were remarkable from top to bottom.

The high yield of 4.300%, while up notably from last month’s 3.969%, stopped through the 4.315% When Issued, a reversal from last month’s tail and one of the best stop throughs in the past year.

The Bid to Cover surged from 2.680 in April to 2.899, the highest since January’s 2.944 and well above the recent average of 2.67.

The internals were even more impressive, because with an award of 68.2%, Indirect bidders, aka foreign buyers, saw the second highest takedown on record, with just the 68.7% in June 2009 higher.

And with Directs taking down 15.60%, that left Dealers with 16.2% of the final allocation.

Overall, this was a stellar auction, and one which not only took advantavge of the recent selloff in the front end and today’s generous concession as the selloff extended, but also one which suggests that the bond market is certainly not afraid of Powell hiking rates any more.