5-Year Treasury Auction Goes Off At Second-Lowest Yield

Treasury prices are firm and yields are lower, not just because of protests in Spain and Greece over the coming austerity measures. Today’s 5-year Treasury Note auction was given an “A” grade from CNBC’s Rick Santelli for this auction as investors are seeking havens from the old risk-on trade that had been on up until this week.

The presiding yield was a low 0.647%, which was apparently the second-lowest yielding auction for the 5-year Treasury. Another show of force was that the bid-to-cover ratio came in at 3.06 and that was the highest demand ratio in nearly six months for the recent five-year auctions. We showed a 2.81 average ratio. Indirect bids were 42% and direct bids were about 10.7%.

Shortly after the auction results the prior 5-year on-the-run Treasury Note showed a yield of 0.63%. That same Note showed a yield of as high as 0.68% yesterday and the yield was as high as 0.70% as recently as September 21. That 5-year rate was 0.74% on September 13 and 0.82% on August 21.

JON C. OGG