2014.07.2814:27:00UTC+00Two-Year Note Auction Attracts Below Average Demand

The Treasury Department sold $29 billion worth of two-year notes on Monday, once again attracting below average demand.

The two-year note auction drew a high yield of 0.544 percent and a bid-to-cover ratio of 3.22.

The Treasury sold $30 billion worth of two-year notes last month, drawing a high yield of 0.511 percent and a bid-to-cover ratio of 3.23.

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 2-year note auction, highly sensitive to expectations for future Fed rate hikes, was soft," said Peter Boockvar, managing director at the Lindsey Group. "The bid to cover of 3.22 was below the previous 12 month average of 3.38 and the lowest since March."

He added, "Also of note and reflecting weak demand, dealers got stuck with almost 59% of the auction, well more than the one year average of 50% and the most since May 2013."

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.