The U.S. Treasury will auction off a record amount ($70 billion) of 5-year notes at 1 PM ET. The results will be judged in relation to the 6-month averages of the major components. Below are the results from the auction last month and the support averages of the major components.

• High Yield:

  • Previous: 4.235%
  • Six-auction average: 4.288%

• Tail (the Tail is the difference between the WI level trading just prior to the auction and the auction high yield. A negative tail is indicative of a strong auction):

  • Previous: -1.0 bps
  • Six-auction average: 0.5 bps

• Bid-to-Cover (the Bid to Cover is the number of bids from investors versus the supply of notes on sale. A higher number is indicative of stronger demand):

  • Previous: 2.41x
  • Six-auction average: 2.41x

• Dealers (the Dealers provide Liquidity and are a backstop in the event of lower than anticipated domestic and international demand. A high % is indicative of low demand from the normal investors. :

  • Previous: 12.7%
  • Six-auction average: 16.7%

• Directs (the Directs are a measure of domestic US demand. A higher number than the six month average is indicative of strong domestic demand):

  • Previous: 16.8%
  • Six-auction average: 17.9%

• Indirects (the Indirects are a measure of international demand. In higher number than the six month average is indicative of strong foreign demand for the issue. The vast majority of US debt is sold to foreign investors):

  • Previous: 70.5%
  • Six-auction average: 65.4%

This article was written by Greg Michalowski at www.forexlive.com.