The U.S. Treasury auctioned off $32 billion in 3-year Treasury notes today at a record low yield of 0.327%. The bid-to-cover ratio was 3.36, lower than the 3.71 average over the last four auctions.

Sales to direct bidders, which includes domestic money managers, comprised 24.9% of purchases, while indirect bidders, which includes foreign central banks, bought 21.9% of the notes on sale. The average for direct bidders has been 16.7%, while the average for indirect bidders has been 30.1%.

With more big banks charging customers to hold safe-haven currencies like Swiss francs and Danish kroner, even the low coupon on Treasuries looks good. The dollar lost ground to the euro earlier today as the Fed’s Open Market Committee opened its 2-day meeting, where most observers expect the U.S. central bank to keep doing what it’s doing. That should have the effect of keeping Treasury yields down, which is what the market expects and which is probably what was reflected in today’s sales.

Paul Ausick

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