Treasury Auction Key
Offering Amount – the amount of bonds that will be awarded through the auction process.
High Yield – In single- and multiple- price auctions, it is the yield accepted and awarded. In a price-based auction, it is the yield associated with the lowest price accepted.
Bid to Cover – is the demand. A bid to cover of 3 means, for every $1 of securities being offered, there is $3 worth of demand. In other words, there is 3x the amount of demand than supply. Historically, a bid to cover ratio under 2.00 was considered a, “failed auction.”
Primary Dealer – are submitters bidding for their own account. These are large investment houses (JP Morgan, Morgan Stanley, Goldman Sachs, etc.) that bid in the auctions, then sell the securities to their clients. In general, a high primary dealer allocation can lead to weakness in the price of treasury tenor. This is since the Primary Dealers participate in the auction to re-sell the treasuries in the secondary market, if there was not a strong direct or indirect bid, they must increase the yield (thus decrease price from high yield), to entice buyers. Here is a list of the current 23 primary dealers. https://www.newyorkfed.org/markets/primarydealers.html
Direct Bidder – are non-primary dealer submitters bidding for their own house accounts, i.e., for the bidder’s “proprietary” accounts. Examples of direct bidders would be domestic trust, banks, mutual funds. In general, the market likes to see a high allocation to direct-bidders because it shows demand from domestic institutions.
Indirect Bidder – are customers placing competitive bids through a direct submitter, includingForeign and International Monetary Authorities placing bids through the Federal Reserve of New York. Market practitioners monitor this to gauge international demand for our bonds. Weak international participation can have significant effect on not only our domestic rates, but also the price of our dollar. Like, “Direct bidding,” market practitioners want to see the percentage allocation higher than primary dealers.