First Coupon Auction Of 2024 Is Stellar Sale Of 3Y Paper

While not nearly as interesting as the upcoming long-duration 10Y and 30Y auction later this week, all eyes were on today’s sale of 3Y paper as it was the first coupon auction of the year. And despite some erroneous previews at competing publications, the auction was nothing short of stellar.

Pricing at a high yield of 4.105%, down 38.5bps from the December yield of 4.490%, and the lowest 3Y high yield stop since May 2023, today’s auction stopped through the When Issued 4.116% by 1.1bps, the biggest stop through since Aug 2023.

The bid to cover was 2.672, a solid jump from the 2.416 in December, and the highest since September.

The internals were most impressive of all, however with Indirects awarded 65.3%, a big jump from last month’s 52.1%, and the highest since August (also well above the six-auction average of 62.3%). And with Directs awarded 16.8%, Dealers were left holding 17.8%, down from 26.2% last month and right on top of the recent average of 17.7%.

Overall, this was a stellar 3Y auction although since yields dropped sharply just ahead of the pricing, much of the good news was already discounted, and not surprisingly there was practially no market reaction after the results.