Treasury 5-year auction preview: so much for a concession
Treasury 5-year auction preview: so much for a concession. Nevertheless, analysts suspect the auction will do ok. The wi has cheapened fractionally to 2.830%, from 2.825%. And it's up 11 bps from the June stop. However, it's still a little richer than April and May offerings. Also, the note's not all that attractive on the curve or on the 2s5s10s butterfly. But analysts suspect there will be a decent short covering bid after the recent market selloff and as the note has traded special in repo the last few days. Indirects should remain solid too given the low, and even negative rates on other 5-year sovereigns. Indeed, there is a 300 bp pick up to the German note, which trades at -0.18%. Some expectation for month-end buying next week could provide support too. Barclays estimates its August 1 extension at 0.06 years, about par for the course. The June auction was decent, stopping at 2.719% and garnering a 2.55 cover (2.49 average), with a 62.0% indirect bid (63.3% average). Direct bidders took 9.5% last month, with primary dealers accepting 28.5%.