One week after a series of rather disappointing auctions, the US treasury has launched the week's refunding sales, starting with today's sale of $38 billion in 3Y notes, which moments ago stopped at a high yield of 1.562%, stropping 0.1bps through when issued 1.563%, and the lowest yield for the tenor since September 2017. This was the third consecutive 3Y auction that has stopped through the When Issued, a sign that investors still have substantial appetite for the short-end.

There was less enthusiasm if one looks at the bid to cover, which despite rebounding from last month's 2.39, was still the second-lowest since March 2009.

Finally, the internals were generally in line, with foreign buyers, or indirects awarded 46.7% of the auction, right on top of the 6 auction average; Directs saw a modest increase to 19.3% from 17.9% a month ago, and above the 16.3% average, while dealers ended up with 34% of the auction, unchanged from last month and just below the recent average.

Overall, a solid auction and one which sets up nicely for tomorrow's sale of benchmark, 10Y paper.

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