Direct bidders buy low share of U.S. 2-year note supply

NEW YORK Tue Aug 26, 2014 1:35pm EDT

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NEW YORK Aug 26 (Reuters) - Large investment managers and other direct bidders purchased 12.14 percent of a $29 billion two-year Treasuries note issue at an auction held on Tuesday, their lowest share in more than a year, Treasury Department data showed.

This was the smallest share by this class of buyers since the 7.83 percent they bought in June 2013.

In the meantime, the Treasury awarded 39.83 percent of the latest two-year issue to indirect bidders which include foreign central banks. This was biggest share to indirect bidders since March.

Primary dealers, which are the top 22 Wall Street firms that do business directly with the Federal Reserve, accounted for 48.03 percent of the two-year note purchases, their smallest share in five months.

Overall bidding for the two-year supply, as measured by the bid-to-cover ratio, was the strongest since May.

After the two-year sale, the Treasury will sell $35 billion in five-year debt and $13 billion in two-year floating-rate notes on Wednesday and $29 billion in seven-year securities on Thursday. (Reporting by Richard Leong; Editing by David Gregorio)

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