The 5 year auction was very good as the yield was 1-2 bps below the when issued and the bid to cover of 2.97 is above the 12 month avg of 2.76 and the best since July ’10. Treasuries are off the lows of the day in response. The maturity comes after yesterday’s 2yr which is most sensitive to expectations of where the fed funds will be and before tomorrow’s 7 yr which becomes more sensitive to inflation and growth expectations. We also of course get to hear from the newly constituted FOMC in 1 hr. Bottom line, I don’t have one in terms of the market message of this solid auction. Tomorrow should be more interesting in gleaning one.
