Seven-year Treasury notes sell below September's yield as primary dealers take less

The US Treasury sold $44 billion of 7-year notes at a high yield of 4.894% on Thursday, 19.1 basis points below the 5.085% of the September sale (computed), according to TreasuryDirect auction data. Primary dealers took a smaller share than in September.

What happened

Competitive bids closed at 1:00 p.m. ET on Thursday, October 29. The bid-to-cover ratio, total bids received divided by the amount sold, was 2.46, against 2.42 in September, the data show. The median accepted yield was 4.840% and the lowest 4.770%.

Of the $43.64 billion of competitive bids accepted, indirect bidders, a group that includes foreign central banks and investment funds, were awarded $25.21 billion, or 57.8% (computed). Direct bidders took $14.32 billion, or 32.8% (computed), and primary dealers $4.11 billion, or 9.4% (computed). In September indirect bidders took 57.2%, direct bidders 30.3% and primary dealers 12.5% (all computed from the same data).

The sale completed the week's three note auctions. As FinanceInTime reported, the 5-year notes sold at 4.845% on Tuesday and the 2-year notes at 4.708% on Monday, both below September's yields. Treasury had announced the three sales at the same sizes as in September.

Why it matters

An auction yield is the return buyers accepted for the amount on offer. The 7-year yield was lower than in September, while the share taken by indirect and direct bidders together rose to 90.6% of the competitive amount from 87.5% (computed), because primary dealers took less. The data do not say why buyers' shares changed.

What to watch

TreasuryDirect lists November 2 as the issue date of the notes. The Treasury's daily par yield curve is on its website, where the 7-year yield can be compared with the auction result.