After yesterday's better than expected 2Y auction, today the US Treasury sold another $36 billion in debt, this time in 5Y paper, with a cash coupon of 2.75% at a yield of 2.864%, which came "on the screws", i.e., the same as the When Issued, which for the 5Y has been a recurring event having printed "on the screws" on 3 of the last 4 auctions. The yield was fractionally higher than the 2.838% in April, and was the highest stop since the 3.129% in the September 2008 auction.

The internals were also solid, with the Bid to Cover printing at 2.52, above April's 2.49 and stronger than the 6 month average of 2.46. Where the auction was weak was the Indirect award, which at 56.2% came below last month's 60.2%, below the 6MMA of 61.8%, and was the lowest going back to July 2016. And with Directs taking down 10.9%, below last month's 13.7%, it meant Dealers were awarded 32.9% of the auction, the highest since December 2017.

Overall, another mediocre auction, in which the stopping yield and the bid to cover offset the decline in international demand.

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