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US 7-yr debt auction flops among nervous investors

NEW YORK, March 25 (Reuters) - The third time was not a charm for the U.S. government to raise money in the bond market this week, stoking anxiety over whether investors have started to tire of new Treasury issues.

Bond managers gave a cold shoulder to the Treasury Department’s $32 billion seven-year debt sale on Thursday, the week’s final note sale following a mediocre $44 billion two-year auction on Tuesday and a weak $42 billion five-year sale on Wednesday. For more see [ID:nTAR000170].

Overall bidding at the latest seven-year auction was the lowest in 10 months. The auction’s bid-to-cover ratio was 2.61, down from 2.98 at the February auction.

“The auction went terribly,” said Thomas Simons, money market economist at Jefferies & Co in New York. “The 7-year note auction was very sloppy, similar to how the 5-year went yesterday.”

In the when-issued market, traders had expected the yield on the seven-year notes US7YTWI=TWEB due March 2017 to clear at 3.340 percent, according to Reuters data. This was below the 3.374 percent high yield at the auction.

In the open market, the seven-year government debt was yielding 3.372 percent US7YT=RR, the highest since early January after the auction. The seven-year yield was trading about 6 basis points higher than the level shortly before the Treasury announced the seven-year auction results.

For a graphic on recent two-year, five-year and seven-year Treasury auctions, double clickhere (Reporting by Richard Leong and Ellen Freilich; Editing by James Dalgleish)