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After yesterday's mediocre 2Y auction, moments ago the US Treasury sold $36 billion in 5Y paper, at a 2.719% yield, tailing the When Issued 2.715% if below last month's 2.864% as the short-end of the curve has tightened in recent weeks. This was both the lowest yield on the 5Y auction and the first decline in the monthly auction yield since March.

Internals were somewhat stronger, with the Bid to Cover rising from 2.52 to 2.55, and above the 6 auction average of 2.47. Indirect bidders stepped up, and took down 62% of the auction, the highest since March, and higher than the 6 auction average of 60.2%; Directs took down 9.5% leaving Dealers with 28.5% of the final allocation, just below the 29.4% average.

Overall, a pretty unremarkable auction, as the market's attention now turns to tomorrow's "belly-buster" when the Treasury will sell $30BN in 7 Year notes.