<div id="readability-page-1" class="page">The U.S. Treasury will auction off $58 billion of 3 year notes at the top of the hour. The auction results will compared to the 6 auction average for the major components. Below are the last values at the last 3 year note auction followed by the 6 auction average.<ul><li>High Yield: 3.579% (6-auction avg. 3.579%) </li><li>Tail: 1.1 bps (6-auction avg. -0.3 bps) </li><li>Bid-to-Cover: 2.55x (6-auction avg. 2.66x) </li><li>Dealers: 19.5% (6-auction avg. 12.3%) </li><li>Directs: 20.7% (6-auction avg. 25.8%) </li><li>Indirects: 59.8% (6-auction avg. 61.9%)</li></ul>What do each of these components represent<ul><li>Tail: The difference between the auction yield and the when-issued (WI) yield just before the auction → Positive tail: weaker demand (investors demanded a higher yield) → Negative tail (stop-through): strong demand </li><li>Bid-to-Cover: Total bids divided by the amount sold → Higher ratio: stronger overall demand and competition → Lower ratio: softer demand </li><li>Dealers (Primary Dealers): Banks obligated to bid and take down supply if others don’t → Higher dealer share: weaker demand from real investors (dealers had to absorb more) → Lower dealer share: healthier auction </li><li>Directs: Domestic buyers placing bids directly (e.g., mutual funds, pensions, hedge funds) → Higher directs: solid domestic real-money demand → Lower directs: less domestic participation </li><li>Indirects: Typically foreign buyers (central banks, sovereign funds, global investors) → Higher indirects: strong foreign demand (generally bullish for Treasuries) → Lower indirects: weaker global appetite </li></ul>Bottom line:<ul><li>Strong auction: Stop-through/low tail + high bid-to-cover + low dealer take + strong directs/indirects </li><li>Weak auction: Positive tail + low bid-to-cover + high dealer share + weak indirect demand**</li></ul></div>

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The U.S. Treasury is set to auction $58 billion of 3-year notes shortly. Key metrics from the last auction include a high yield of 3.579%, a tail of 1.1 bps, a bid-to-cover ratio of 2.55x, with dealers taking 19.5%, directs at 20.7%, and indirects at 59.8%. These components indicate demand levels, with a strong auction characterized by low tail, high bid-to-cover, and strong participation from both domestic and foreign buyers.

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U.S. Treasury to auction $58 billion of 3 year notes at the top of the hour