Two-Year Note Auction Attracts Below Average Demand

(RTTNews) - Kicking off this week's series of long-term securities auctions, the Treasury Department sold $27 billion worth of two-year notes on Monday, attracting below average demand.

The two-year note auction drew a high yield of 0.703 percent and a bid-to-cover ratio of 3.21.

Last month, the Treasury sold $28 billion worth of two-year notes, drawing a high yield of 0.542 percent and a bid-to-cover ratio of 3.71.

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 two-year note auctions had an average bid-to-cover ratio of 3.40.

Peter Boockvar, managing director at the Lindsey Group, said, "Bottom line, even with near four-year highs in yields, the two-year auction was mediocre as the market continues to sniff out rate hikes in 2015."

Looking ahead, the Treasury is due to sell $35 billion worth of five-year notes on Tuesday and $29 billion worth of seven-year notes on Wednesday.