• High-yield 3.585%
  • WI level at the time of the auction 3.609%
  • Tail -2.4 bps vs six-month average of -0.2 basis points
  • Bid to cover 2.45X versus six-month average of 2.37X
  • Directs (measure of domestic demand) 16.33% vs. six-month average of 19.0%
  • Indirects (measure of international demand) 74.63% versus six-month average of 69.4%
  • Dealers 9.04% versus six-month average of 11.6%

For the third auction in a row this week, the international demand was strong, while the domestic demand was weaker than the six-month average. Dealers were saddled with less than normal thanks to the international demand.

The bid the cover was above the six-month average. The tail was a solid -2.4 basis points below the WI level at the time of the auction.

Auction Grade: A-

The demand may be coming from Japan as fears that the BOJ may continue the ratcheting up of the 10 year yields when the announce their latest policy decision next week.

Recall, that last month the BOJ moved the target ceiling yield to 0.50% from 0.25%. If yields move higher, prices move lower. So investors in Japan debt, may be looking to the US who is nearer the end of rate hikes.

A snapshot of the markets shows snapshot :

in the US debt market