The US treasury will auction off $43 billion of a 5 year notes at the top of the hour. The auction comes after yesterdays tepid response for the 2 year auction especially from international investors who stepped away from buying.

What are the 6 month averages of the major components going into the auction:

• Bid to cover 2.36X
• Tail 1.2 basis points.
• Dealers 19.4%
• Directs (a measure of domestic demand) 18.8%
• Indirects (a measure of international demand) 61.8%

The WI level at the time of the auction will come out at 1 PM ET.

The auction results will be announced a minute or 2 later.

• If the high yield is higher than the WI level, it is indicative of less investor demand.

• If the high yield is less than the Wi level, it is indicative of stronger demand.

Also in consideration is the average tale over the last 6 months. The 1.5 basis point tail indicates that on average, the high yield is 1.5 basis points higher than the WI level at the time of the auction. So relatively speaking if the tale comes in at 0.5 basis points, it is a better auction vs. previous ones.