After a solid, if tailing, record big 2Y auction to start the week on Monday, moments ago the Treasury sold another record-sized batch of paper, this time in the form of 5Y notes, or specifically $67 billion of them, the largest such auction on record.
While - as CNBC's Steve Liesman said this morning - it is remarkable that there was any buyers for this size paper, what is just as remarkable is that there was rather solid demand for this debt: the auction stopped at a yield of 4.235%, below last month's 4.320% and stopping through the 4.245% When Issued, the first stop through following 2 months of tails.
The Bid to Cover was 2.41, identical to last month and just below the recent auction average of 2.43.
The internals were especially strong with Indirects surging to a 2024 high of 70.45% from 63.53% last month, and far above the 65.5% recent average. And with Directs awarded 16.8%, just below the recent average of 18.0%, Dealers were left holding just 12.8%, the lowest since June 2023.
Overall, this was a remarkably strong auction which was especially notable since it was also the biggest 5Y auction on record, with yields sliding across the curve after news of the auction pricing hit...
... and indicates that there is a growing disconnect between supply (surging) and demand (also surging) which will continue until one day there is a violent repricing as demand finally pulls back from the infinitely growing supply at which point it will be game over for the western financial system. Until then, just BTFD if you can find any D that is...
