Three-Year Note Auction Attracts Slightly Above Average Demand

(RTTNews) - Kicking off this week's series of long-term securities auctions, the Treasury Department sold $30 billion worth of three-year notes on Tuesday, attracting slightly above average demand.

The three-year note auction drew a high yield of 0.895 percent and a bid-to-cover ratio of 3.36.

Last month, the Treasury also sold $30 billion worth of three-year notes, drawing a high yield of 0.802 percent and a bid-to-cover ratio of 3.25.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

The ten previous three-year note auctions had an average bid-to-cover ratio of 3.28.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "The 3-year note auction, typically a bore, is now more of a focus because of the potential Federal Reserve exit strategy that lies ahead."

"Today's auction however told us nothing new about sentiment as it was about in line with expectations as the yield was dead on with the when issued and the bid to cover of 3.36 was only slightly above the 12 month average of 3.28," he added.

Looking ahead, the Treasury is due to sell $21 billion worth of ten-year notes on Wednesday and $13 billion worth of thirty-year bonds on Thursday.