After today's mediocre sales of $42 billion in 2Y paper, moments ago the US Treasury completed the second auction of the day (courtesy of the week's abbreviated schedule) when it sold $43 billion in 5Y notes in another average auction.

The high yield of 3.974% was the second consecutive decline after peaking at 4.228% in September. It also tailed the When Issued by a modest 0.7bps (vs a 1.8bps stop through last month). This was the 6th 5Y auction tail in the past 8 auctions.

The bid to cover of 2.39 came in below last month's 2.48 but was above the 6-auction average of 2.37.

The internals were also fine, with Indirects taking down 66.2%, down from 68.0% last month, and above the 62.4% recent average; and with Directs awarded 18.7%, Dealers were left holing 15.1%, the lowest since February.

Overall, a mediocre, tailing auction but with stronger-than-expected internals. And with that we now look to tomorrow's last for the week sale of 7Y paper ahead of the holiday.

(Click on image to enlarge)

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