Two-year Treasury Auction Sees Fair Demand

The yield for two-year Treasurys sold during Monday's auction was at 0.703%, 0.4 basis point lower than its level during the minute before. The lower yield was an indication of solid demand on a day when many trading desks were half-staffed, said Tom di Galoma, head of rates and credit trading at ED & F Man. Bond yields move inversely to prices, so the slightly lower yield at auction means investors paid more for those bonds. Licensed Treasury dealers took home a larger than average chunk of the bonds, winning 49.8%, compared to an average of 47%. Direct bidders, a group that includes domestic money managers, took home 14.5% of the bonds, compared to an average of 15%. Meanwhile, indirect bidders, a group that includes foreign central banks, took home 35.7% of Treasurys, compared to an average of 38%.