Today’s auction of $29 billion in seven-year U.S. Treasury notes sold out at a yield of 1.233%. The bid-to-cover ratio of 2.72 was only slightly lower than the average ratio of 2.68 from the last six sales.

Prior to the sale, bonds yields were slightly lower on the 10-year and 30-year notes, with both down just 3 basis points. The 10-year notes were yielding 1.79% and the 30-year notes 2.97%. Yields on U.S. 10-year notes topped 1.84% yesterday as hopes rose for a deal on the U.S. fiscal cliff.

At today’s auction, primary dealers took about $11 billion in seven-year notes, while direct bidders took $6.7 billion (about 23%) and indirect bidders took $11.6 billion (about 40%). The direct bidder portion was substantially higher than the 14.4% average for the last six sales, and the indirect portion of 39.9% was essentially at the average.

Paul Ausick

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