$21 Billion 10 Year Auction Closes At New Low Yield As Indirects Shy Away
Today's $21 billion 10 Year bond closed, as expected, without a glitch, which is normal as the Primary dealers and the Directs once again account for nearly 60% of the take down. The 2.475% high yield was the lowest in 2010, and approaching the lowest on record from early 2010. Yet what was most troubling is that like in yesterday's 3 Year auction, both the Bid to Cover and the Indirect participation have started to decline. At 2.99 the BTC was the lowest since the May 2010 auction, following which every BTC was over 3. Additionally, and more troubling, the Indirect takedown was just 41.5%, a major drop from last auction's 54.7%, which caused both the Primary Dealer back up bid, and the Direct take downs, to jump materially, to 47.8% and 10.7%, respectively. Since the 10 Year should be one of the most preferred spots on the curve for foreign investor interest, the sudden drop is certainly troubling, and may be an early shot of how China plans on retaliating for recent trade war escalations in the US.