Solid 5Y Auction Despite 12th Consecutive Tail, Thanks To Stellar Foreign Demand

After a mediocre 2Y auction on Tuesday, moments ago the Treasury sold the week’s second coupon auction when it auctioned off $70BN in 5Y paper to solid demand, some superficial weakness notwithstanding. 

The auction stopped at a high yield of 4.182%, up from 3.955% in April and the highest yield since Jan 2025. The auction also tailed the 4.181% When Issued by 0.1bp, which was the 12th consecutive tailing auction for the tenor, the longest stretch on record.

The bid to cover was 2.34, up from 2.33 last month, and right on top of the 6-auction average 2 339. What is notable here is just how much the BTC has flatlined in the past 3 years.

The internals were also solid with Indirects awarded 74.85%, the highest since May 2025 and one of the highest on record. And with Directs awarded 12.34%, the lowest since March 2025, Dealers were left with 12.8% of the auction, up fractionally from 12.7% in April and above the recent average of 12.0%.

Overall, this was a solid auction with impressive foreign demand, where the only blemish was the tiny tail, which however one can ignore considering the impressive foreign bid.