$26 Billion 10 Year Prices At 3.34%, Highest Yield Since May
Today's $26 billion 10 year auction has priced and while it was not the complete rout many had expected, it did tail, pricing wide of the WI, at 3.34%, which is 70 bps compared to a month earlier, and the highest yield since the May 3.548% auction. Bid To Cover came at 2.92, on the low side of all 2010 auctions. In terms of participation, Indirect take down dropped from 56.6% last auction to 44.4%, which was low, but has been worse in 2010 (29% in January), as Directs stepped up again and bought 11.4%, with the balance of 44.2% of course purchased by the Primary Dealers. We expect at least a small part of this issue to be monetized by Brian Sack in as little as two weeks. Lastly, those hoping for a respite from blowing out rates better pray that Democrats manage to squeeze the Build America Bond provision in the tax rate extension, or else the bottom will fall out of the muni market, forcing Bernanke to unleash QE3: the broke state version.