US sells USD 70bln of 5yr notes: Tail 0.9bps

• High Yield: 4.408% (prev. 4.200%, six-auction avg. 3.959%); WI 4.399%.


• Tail: 0.9bps (prev. 0.7bps, six-auction avg. 0.6bps)


• Bid-to-Cover: 2.28x (prev. 2.35x, six-auction avg. 2.33x)


• Dealers: 13.53% (prev. 12.9%, six-auction avg. 12.9%)


• Directs: 27.22% (prev. 25.5%, six-auction avg. 21.4%)


• Indirects: 59.25% (prev. 61.6%, six-auction avg. 65.6%)

Analysis details (18:19)

Overall, a soft 5-year note auction. The US Treasury sold USD 70bln of 5-year notes at a high yield of 4.408%, above the prior auction's 4.200% and the six-auction average of 3.959%. The auction tailed the when-issued yield of 4.399% by 0.9bps, wider than both the prior 0.7bp tail and the six-auction average of 0.6bps.

Demand metrics were weak. The bid-to-cover ratio fell to 2.28x from 2.35x, below the six-auction average of 2.33x. Dealers were left with 13.53% of the issue, up from 12.9% previously and above the 12.9% average, pointing to softer overall end-user demand.

The bidder breakdown was mixed, with stronger direct participation failing to offset weakness among indirect bidders. Directs took 27.22% of the auction, up from 25.5% previously and comfortably above the 21.4% six-auction average. However, indirect participation fell further to 59.25% from 61.6%, well below the 65.6% average.

Overall, the auction was notably softer than the strong 2-year offering earlier in the session, with the wider-than-average tail, weak bid-to-cover and elevated dealer allocation all pointing to softer demand. Direct participation remained healthy, but this was more than offset by another decline in indirect demand. Some of the concession into the auction had also faded following the strong 2-year sale, potentially reducing the attractiveness of the yield on offer at the margin.

27 Jul 2026 - 18:02- Fixed IncomeImportant- Source: Treasury Direct