Weak 5-year auction leads to bond selling
The $34 billion of 5-year notes were sold at a yield of 1.849%, above pre-market talk of 1.801%, per Bloomberg. The bid-to-cover ratio came in at 2.02, below the average of 2.18 at the last 10 sales and down from 2.21 in the February auction. Indirect bidders purchased just 30% of the notes on offer, down from 48.9% at the last auction and the lowest since December.
Bonds are getting spanked in the wake of this sale. The long bond futures are down 1 26/32 now, with a virulent sell off taking place after the auction results came public at 1 p.m. What makes the sell off all the more interesting is that it is happening DESPITE the first actual Fed purchases of U.S. Treasuries. The Fed bought $7.5 billion of Treasuries with maturities in the 2016 to 2019 timeframe.