• High Yield: 3.579% vs 6-month avg. 3.563%

• WI level at the time of the auction 3.568%

• Tail 1.1 bps vs 6 month average of -0.6 bps

• Bid-to-Cover 2.55X vs 6 month average of 2.69x

• Dealers 19.5% vs 6 month average of 10.5%

• Directs 20.7% versus 6 month average of 25.3%

• Indirects: 59.8% versus 6 month average of 64.3%

AUCTION GRADE: D

Not a good auction as the dealers were saddled with 19.5% while above the 10.5% 6 month average. The tail was 1.1 basis points which was also well above the -0.6 basis point average. Both domestic and international demand was well below the averages. The only reason it indicated a grade of F, is the auction did not fail. That is, there was enough bidders to buy it. However, for a 3 year note auction, the demand was tepid at best.

The treasury will auction off $39 billion of 9 year and 11 month notes tomorrow and $22 billion of 29 year and 11 month bonds on Thursday. Both will be reopening’s of last months issue.