The Treasury just auctioned $36 billion 5-year notes at a high yield of 1.374% (record low). 

Demand as measured by the bid to cover ratio was 2.83 bids submitted for every 1 accepted by Treasury. This demand metric is above average but the high-yield tailed (higher than) the 1pm "When Issued" yield, indicating buyers were ready and willing but only if the Treasury cheapened the issue.

Primary dealers, who are still bloated from the 2-year note yesterday, added $14.5 billion 5s or 40.6% of the competitive bid. This is below average for the street. Yay!Indirect accounts supported the buyside bid, taking home 50.8% of the auction while direct bidders were awarded a well-below average 8.7% of the issue. Directs were particularly apathetic about this spot on the curve while indirects were aggressive.

Plain and Simple: Not good not bad. Average at best. Indirect bidders saved the day.

Stocks are rebounding from 2-month lows (just about) thanks to a reversal in oil prices. Consequently, profit taking has pushed yields in the long end of the curve higher and FNCL 4.0s are backing away from newly set record price highs  (with hedge ratios so short I have to mention localized weakness in the belly too. 3s, 5s, and 7s are the worst performers).

The October FNCL 4.0 is now trading in the red, -0-01 at 102-18. The October FNCL 4.5 is +0-02 at 104-08.