U.S. Treasury sells $58 billion of 3 year notes at a high yield of 4.627%

• WI level at the time of the auction: 4.622%

• High yield: 4.627%

• Tail: 0.5 basis points vs an average stop-through of 0.1 basis point

• Bid to cover: 2.53X vs the average of 2.64X

• Directs: 35.0% vs the average of 25.2%

• Indirects: 55.5% vs the average of 62.7%

• Dealers: 9.5% vs the average of 12.1%

Auction grade: C−

The auction was a little below average. The high yield came in 0.5 basis points above the when-issued level, and the bid to cover fell short of its average. Indirect bidders took a smaller share than usual, but direct bidders stepped up, taking 35.0% against an average of 25.2%. That helped keep the dealer takedown below average at 9.5%. The strong direct demand softened the result, but the tail and lighter overall bidding tipped the grade to a C−.