The week's first coupon auction just took place, and in response to the Treasury offering $69BN in 2 year paper, the demand was nothing short of superb.

The high yield in today's auction was 3.984% (resulting in a coupon of 3.875%), which was the first sub-4% auction since Sept 2024 (when it was 3.520% and followed the Fed's 50bps jumbo rate cut). The auction stopped through the When Issued 3.987% by 0.3bps, the 4th through auction in the past 5.

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The bid to cover was 2.656, up from 2.559 in February and the highest since December.

The internals were solid, as Indirects took down 75.8%, down from 85.5%, but above the recent average of 71.7%. And with Directs awarded 13.6%, Dealers were left holding 10.7%, above last month's near record low 6.9% below the recent average of 12.0%.

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Overall, this was a very strong auction and one which obviously did not need a concession (10Y yields slid 6bps from session highs of 4.36% earlier to 4.30% at the time of the sale) to price on highly beneficial terms.

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