30 Year Auction Prices At 4.569%, Highest Bid To Cover In History On Flight To Safety

Tyler Durden's picture

Flight to safety into US Treasuries is back: today's $13 billion 30 Year bond priced at 4.569%, the first drop in issuance yield since September 2010, but the stunner was the Bid To Cover, which at 3.02 (compared to last month's 2.51) was the highest ever. The said, Primary Dealers did come in and buy more than half the auction or 53% to be precise with the knowledge they will promptly flip it back to the Fed in the next few months (we will find out when after the new POMO schedule is posted at 2 PM today). Indirects were 40.7%, higher than the LTM average of 37.7%, and Direct Bidders filled out the take down at 6.4%. Altogether a strong auction if one can make that statement in an environment when the PDs are well aware there is no auction purchasing risk at all courtesy of Brian Sack.

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TheGreatPonzi's picture

How can we be 100% sure the FED is not buying (through shell companies)?

The ECB is bidding every peripheral bond emission, the newspapers make them pass as "successes", and we learn the truth one month later. 

If some traders weren't opening their mouth, we'd never know when the buyer is the ECB.

jgauthier33's picture

Does it really matter if the Fed is buying through "shell" companies? They are openly monetizing debt two or three weeks after it is issued. The banks may as well be "shell" companies.

Xkwisetly Paneful's picture

So everything that is being sold is now sitting in currency somewhere?

Is that the hypothesis as everything declines in price but bonds?

plocequ1's picture

Does this mean the market will go up now?

tellsometruth's picture

I'll tell you what is strong... the testicular fortitude of said Brian Sack

sharkbait's picture

Why?  Does he need to worry about a P&L?  No.  A trained monkey could do his job.

Cleanclog's picture

Exactly, which is why PIMCO knew this would be a relatively good time to be able to get out of a lot of long bond positions without rattling the market.  How things will go on the next Treas auction week of 3/10/30s will be when PIMCO will start to like their new strategy.  And 100 bps from here is when they may start extending their duration again.  Or not.  If they forsee a yield curve inversion, they'll stay high cash and short term roll overs.

cocoablini's picture

The FED will try like hell to keep short rates down, or the yield curve will invert as the race to cash is on.
I think this ship is going down and the banks are maxed,taxed and need to profittake on their stocks.
They have to save the bond market, whihc will not save the stock market, which is rolling over with excess speculation.
What's a ponzi to do.
Bond market is 80x larger than stock market- and the US cannot afford to stop issuing debt or pay higher rates.
I have a VERY bad feeling about what is going on- PImCO was a real eye opener

Cdad's picture

For fuck sake!

Listen, on just this morning you have collapsing commodities, criminal syndicate Wall Street bankers weaving really fucked up lies, causing them to swallow hard and look down, the Middle fucking East just going to hell while oil goes totally contrary fuckwad...

Who built this shit!  The Ministy of Truth, of course.  Bob Pisanni ain't likin' any of this, 'cause all of a sudden he is speaking quietly.  Check this Tyler Mathisen fuck...lifting himself out of his chair on the arm rests of his chair and talking about dog whistles.

Here comes the print I told you about on another thread...$131.17 on the Roach Motel [SPY].  You know what to do.


Juggernaut Nihilism's picture

Doesn't today prove that the flight to safety, for now, is still into the dollar?  Therefore a flare-up in Europe this summer, or a temporary halt to QE2 before QE3, will cause capital to fly into the dollar and crash commodities, including precious metals.

The concern voiced in a recent article, that the Fed would take a hemming and hawing breather after QE2, purposely crashing the markets, driving the dollar up, and allowing the banks to deploy all the cash they've accumulated flipping two-week-old bonds, buying up all the crashed assets, and then announcing QE3, with much less resistance due to the crash, driving up the banks' shiny new assets, seems more and more credible.

I would never think of dumping even one ounce of my physical sitting safely in my... err... safe, but the miners and such that I own in my trading account will all be destroyed.  How to hedge?  Just short the S&P?  VIX?  Sell and wait for the crash to buy back (I am particularly averse to this last, disliking the idea of selling companies that I like very much for the long-term, hoping for a crash that may or may not come).  What else?  It's the question of the moment, IMO.

Acting Man's picture

Looks like it to me.  Totally making me retract my position from just a couple days ago.

tickhound's picture

Knee-jerk, the old habits die hard... "Dollar safety" moving itself into the oxymoron bin. 

Henry Chinaski's picture

reality TV, graphic novel, shared responsibility, green industry, gay marriage, public property...

tickhound's picture

fiscal conservative, liberal tolerance, resident alien, sanitary landfill, political science, voluntary compliance, working retirement...

Oh regional Indian's picture

Clearly Free Money PDs are the HFT's of the bond market. 

The usual suspects continue to be the usual suspects.

Flight to safety is a joke, more like a crawl (with a gun to your head) into danger.



trav7777's picture

i'm still looking at a WTI print of 101+...how much safety is this dollar again?

Xkwisetly Paneful's picture

Enough that US bonds traded under transaction costs in DEC 2008 long before POMO union bot.

bob_dabolina's picture

Diversify yo bonds nigga

max2205's picture

Bill Gross. Bill Gross. bill gross......

Cleanclog's picture

Aha, Saudi police firing on rally rumor is giving the short term treasuries a nice goose.  Did PIMCO have feet on the ground in the Saudi police force?  Sarc.   I don't think so, but it does give their new position a bit of happiness.  Still think their l-t strategy anticipates longer maturities backing up substantially.

pemdas's picture

Surely you jest when you say buying a 30 year bond is a flight to safety.

Savonarola's picture

Well, if you believe that the deflationary depression has yet to begin, then a 30-year UST near 4.6% might be a great deal. Recall the 12% long bonds of the early 1980s? I'll bet Gross was a seller then too (we all thought rates were goin higher.)

Xkwisetly Paneful's picture

NO flight to US bonds, AG or the yuan is the new wold standard bearer-I read it everyday at ZH.


Stop disrupting the herd, going to cut down on the,

but I got out of the metals at the top posts.