Yesterday's record 2-year Treasury Note auction went off fairly well. Today's 5-year auction? Not so much. The Treasury tried to sell a record $39 billion of notes. Pre
-auction talk was for the notes to sell at a yield of 2.635%. Instead, they went off at 2.689%, more than 5 basis points higher. The bid-to-cover ratio fell to 1.92 from 2.58 at the last auction. In fact, that was the worst since September 2008. Indirect bidders took down just 36.7% of the notes sold, down from 62.8% and the lowest since April. Bond futures dropped sharply on the news from pre-auction trade around 116 24/32 to as low as 115 16/32.