US treasury auctions $69B of 2 year notes at a high yield of 3.499%

Today, the U.S. Treasury auctioned $69 billion of 2-year notes, with results falling short of market expectations. The high yield reached 3.499%, slightly above the reference yield of 3.496% at the time of the auction. The bid-to-cover ratio was 2.54x, below the 6-month average of 2.61x. Direct bidders accounted for 34.1% while indirect bidders stood at 53.2%, indicating that domestic investor participation was robust compared to the average, whereas international participation was lacking. Dealers held 12.7% of the auction, exceeding the average of 11.2%, pointing to overall weaker demand. The auction was rated as D+, suggesting that even though seasonal effects from the holiday week contributed to the lackluster participation, the overall outcome was below expectations. Upcoming auctions include $70 billion of 5-year notes on Tuesday and $44 billion of 7-year notes on Wednesday.