One week ago the US five year bonds were trading north of +1.22%. Today, these notes are offering close to +1% in yield. Falling equities and perhaps the weaker than expected US durable goods report this morning seems to have provided a stronger bid for safe-haven product. US Treasury prices have continued to fluctuate before todayâ€™s government sell of $35-billion in five-year securities, the second of three note sales this week totaling $99-billion. Also aiding to push the US yield curve lower is the Fed buying +$4.81-billion of Treasuries today due from August 2020 to November 2021.
This afternoonâ€™s 5-year note auction pales in comparison to yesterdayâ€™s strong 2-year note sale. Perhaps the strong premarket interest negated some of the demand at auction time. The +$35-billion note sale was taken down at a yield of +1.04% and itâ€™s the â€œfirst tranche that went off about +1% since Octoberâ€. Pre-auction, five year product was trading at +1.026%, implying that the take down was rather soft. The bid-to cover (a gauge of overall demand) was 2.85, compared to the 3.02 average of the previous four-sales. The indirect bid (a proxy of foreign demand) was 41.9% versus a four-auction average of 45.3%. The direct bid was 11.3%