Today’s coupon was 1.25%, with a yield of 1.26% and with 73.75% of bids at the high. Another measurement is the bid-to-cover and that was a tad light at 2.65. The 7-year Treasury auction is not a true barometer for long-term rates like you would expect from the 10-Year note or particularly from the 30-Year Long Bond. As far as why that is the case, it is quite simply because the traditional banks have a cap out in the five-year to seven-year range for matching off liabilities and assets.
The indirect bids took up 33.4% and the direct bid took up 18.2% of the auction. CNBC’s Rick Santelli gave a grade of C+ for this Treasury auction.
As far as how 1.26% compares for a yield, the 5-year yield is about 0.77% and teh 10-year yield is about 1.877%.
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