$29 Billion 7 Year Auction Prices At 2.74%, 2.85 Bid To Cover

Today's $29 billion in 7 Year bonds closed at a 2.74% high yield (95.59% allotted at high), a slight drop from the 2.83% in December. The Bid To Cover was 2.85, a hair less than the 2.86 in December, and in line with the last 12 auction average of 2.875%. The auction came well inside of the When Issued, confirming the auction was much stronger than expected. As a result the entire bond complex has seen prices jump on the back of the very well accepted auction. Indirects, who have recently been skittish from left of the belly auctions showed some modest enthusiasm and bought up 42.2% of the auction, almost certainly to turn around and sell it in the open market, as the Fed is a 1:1 buyer for all gross issuance in 2011: i.e., the fact that Indirects taken down close to half is pretty much meaningless.

Comments

[Salinger]

repost

Posted earlier today this is the Bloomberg interview from yesterday with Jim Grant, crappy audio and no video but the interview was never posted on the Bloomberg site.  Unlike Marc Faber, whom the MSM don't take seriously even though he has been more accurate than most, Mr Grant is taken very seriously by the MSM and when he makes a statement like this in the interview:

"Let's go back to the 1913 anticipation of this great institution (the Fed). The founders were sitting around a table; how would they..they did not say  the Fed were to be in the business of monetizing vast amounts of public and private debt and they did not anticipate that foreign central banks would be absorbing trillions of dollars worth of greenbacks through the agency of our privilege as a reserve issuing currency country. Do we have a picture of that outrageous ...somewhere in the Bloomberg archives is a picture that ends in 3.4...this is the leverage of the New York Federal Reserve Bank... ahh this is the graph that ends in the number $3.4 trillion and that is the sum of treasuries and agencies held in ... in central foreign banks. That mouthful means that the US is consuming much more than it produces it pays its bills in dollars and these dollars wind up on the balance sheets of foreign central banks, remember that AIG got into trouble because it never settled its accounts in those exotic derivatives, it never had to pay cash and receive cash for its mark to market positions, similar with the US we run deficits, we have for 25 consecutive years we never settle up. Settling up was part and parcel of central banking, we have abandoned that, the Fed today should come out and say, now that you mention it Jim, we do  owe the world an apology."

http://bit.ly/fTGC8E (youtube bad quality audio only)

[Pat Hand]

Surprise winning trade of the year will be rally in long tenor US bonds.

[HarryWanger]

Makes sense in lieu of the world events taking stage today that the world wants US Bonds and equities. Where else can they find stability??

[Mr Lennon Hendrix]

Where else can they find stability??

Gold/silver/platinum/oil.  In other words, real resources.  The dollar is backed by nothing therefore it is worth nothing.  Considering that the definition of monie states monie "must be a store of wealth" the dollar is not monie.  Fiat is not monie.  Gold is monie.

Get monie.

[SheepDog-One]

'Stability' is in US Treasuries which pay off in worthless FRN's? Good luck with that!

[satansanus]

i told all hookers tbt putinskis are breakin blackscholes and shovin wankster math down the throats of sinners!!!!!!

[Mr Lennon Hendrix]

Hu forgot the 'when you are strong, act weak, and when you are weak act strong' Art of War theory.  How entertaining it is to watch them all flail.

[SheepDog-One]

Flailfest.

[props2009]

The French say we will never let the EURO fail. Sarkozy may not have performed for his own people but that does not stop him from shooting his mouth off on the EURO.

http://dawnwires.com/investment-news/the-french-and-germans-will-never-l...

[Yen Cross]

Decent B/C on 7's indirect bids?