Another day, another very ugly auction.

After yesterday's appallingly bad 2Y auction, moments ago the Treasury sold $70BN in 5Y paper in what was another terrible auction.

Just after 1pm, the auction stopped at a high yield of 3.966%, up from 3.608% in February and the highest since May 2025. It also tailed the When Issued 3.966% by 1.4bps, the biggest tail since Oct 2024.

The bid to cover was 2.29, down from 2.32 last month and the lowest since Sept 2022. 

The weak demand picture was also seen in the internals, where Indirects dropped to 61.9% from 62.5%, but was above the recent average of 61.7%. Like yesterday, Directs dropped - if to a lesser extent - taking down 22.48% of the auction, down from 24.70% and the lowest since May 2025. Dealers were left to cover the balance, taking 15.6%, the most since May 2024. 

Overall, this was another very ugly auction, if slightly better than yesterday's dismal sale of 2Y paper. Still, that is hardly a endorsement at a time when the US is about to see a surge in war-related deficit funding demands.