Yields Hit Session High After Subpar 5Y Auction Tails For 10th Consecutive Time As Foreign Buyers Shrink

While yesterday's 2 Year auction was absolutely blockbuster, today's sale of 5Y paper left quite a bit to be desired.

Starting at the top, today's sale of $70BN in 2Y paper priced at a high yield of 4.393%, which was modestly below last month's 4.408% if at the high end of all auctions in the past few years. It also tailed the When Issued 4.391% by 0.2bps, which was the 15th consecutive auction without a Stop Through, and the 10th tailing auction in a row.

The bid to cover was 2.37, an improvement to last month's 2.28 and better than the recent average of 2.32. It was also the highest bid to cover going back to November 2025. 

The internals were weaker, with foreign buyers taking down 61.5%, up from 59.2% last month if below the recent average of 65.4%. And with Directs hanging in there, and taking 28.4% of the auction, the most since January, Dealers were left holding 10.0%, the lowest since December. 

Overall, this was a solid, if notably weaker auction than yesterday's phenomenal 2Y sale, and the continued drift higher in the 10Y yield and the entire curve to session highs, confirmed the market's muted reception.