$34 Billion In 3 Year Auction Closes At Second Highest Bid To Cover In History, Lowest Yield

Tyler Durden's picture

The Treasury just auctioned off another $34 billion at what appears to be a record low yield of 0.844%, which incidentally came 1.8 bps tight to the When Issued. The Bid To Cover of 3.31 was the second highest in history, lower to just the 3.33 in November of 2009. Direct Bidders continue to take down a major portion of the auction, responsible for 15.8% of the take down, with Indirects taking down 40.5% and Indirects at 43.7%. 53.42% was allotted at the High Yield. Note the divergence between the ever decreasing yield and the ever increasing BTC on the chart below. Also notable was that the Fed's SOMA took down $2 billion of the auction. The 10 Year is now rallying as well on these strong results.

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docj's picture

They can keep this going more than a little longer, it seems.

Cognitive Dissonance's picture

I agree. The desperation to continue to believe that "they" will somehow pull a rabbit out of their hat will only accelerate the desirability of American government debt. Until the belief suddenly turns into fear that you and I and we and they may be left holding the bag, where upon "I" and everyone else, most especially Russia, China etc, panic and sell.

So far, it's in every one's interest to keep the charade going. But it's clear that many nations, not just China and Russia, are trying to diversify into other forms of currency and "real" wealth. The same for Gold. All the nations understand that Gold and other PM's are manipulated. For now, this is to their advantage because they can exchange dollars and other currencies into Gold and Silver at artificially lower prices.

Regardless of whether you think inflation or deflation or some mix of the two is in the cards, "real" things will hold their value better over the next 10 years than "paper" things. This is a given and most aware individuals know it. Just because they can keep the paper levitated now doesn't mean they can do so forever. Fiat always collapses. The levitation methods have become more sophisticated which allows for more manipulation in real time. This only extends out the timeline of death and destruction. It doesn't change the end game, only the date when the end game begins in earnest.

MarketTruth's picture

And the BUBBLE keeps inflating... until...

jakoye's picture

Agree precisely with this: " "real" things will hold their value better over the next 10 years than "paper" things".

Spitzer's picture

you are clueless.

Bonds fell in the 30s and the 70s, it will not be diffrent this time.

fuu's picture

Auctions over time for the ramp up. Oh. Never mind.

Thorlyx's picture

Very simple. Demand and supply. Huge demand makes price fall. New normal. Nothing special. Move along.

-1Delta's picture


 I will own my dam 10yr until i dont need too...

Spitzer's picture

do you have a history of being bullish in markets tops ?

Your faith in the 10 year is a good indication of a market top

MsCreant's picture

And I just thought you were being clever in your presentation, instead we are seeing just how profoundly UNCLEVER they are. Wow.

Rusty_Shackleford's picture

Before too long, the entire text of the bills will be blank as well.


The needs and wants of FEDGOD (peace be upon it) must not be limited by such petty contrivances.

Cognitive Dissonance's picture

Before too long, the entire text of the bills will be blank as well.

"To be filled in later."

The SEC and FINRA won't allow me to (correctly and rightfully) keep blank but signed client forms. Why is Congress allowed to pass blank bills? Oh, wait, I understand. Because they can. 

Cathartes Aura's picture

lol. . . might it be this?

Summoned back from summer break, the House on Tuesday pushed through an emergency $26 billion jobs bill that Democrats said would save 300,000 teachers, police and others from election-year layoffs. President Barack Obama immediately signed it into law.



I must say, I like the "fill in the blank" version better. . . because it's all a "blank" check to them anyhow. . .

phaesed's picture

Oh c'mon people, why do you keep doubting the wisdom going against the common consensus of classically (for those with brains read: institutionally) trained economists? Not only are the low yields sustaining the economy, but the threat of deflation is keeping commodities in check for the moment.... Yeah, it'll crash, but is deflation REALLY a bad thing? If you ask me, I prefer paying $1.50 at the pump for gas and 100k less for a home that's too big for me anyways.


stoverny's picture

I remember on one of his podcasts, Peter Schiff saying, "Thank God we have the Fed, to protect us from the evil of paying less for things."

-1Delta's picture

I hate when people comment on commodities, and they dont understand them. Commodities are oversupplied, and if it were not for currencies/money flow they would be a lot cheaper... they are delivering oil in OK for a reason- there is no demand...

Spitzer's picture

they are cheaper, priced in the currency known as gold.

Perseid.Rocks's picture

Household Sector ? I'm convinced they're using that accounting name to borrow against Americans' 401Ks and IRAs (and without their knowledge since no one seems to ever discuss the possibility).


Sudden Debt's picture

If that ain't a bearish tone for tomorrows stock market I don't know what is.

Unless Benny B. does his magic, we're screwed...

redarrow's picture

aka...deflation dead ahead and the USS titanic has failed rudder pistons. It does not matter what they do, there is no demand to keep the economy growing. It is like a great white shark that has outgrown the biggest pool you can find.

Spitzer's picture

you forgot that treasuries rely on taxes from the US economy to service them. Soon people will find out that what is bad for US stocks, is bad for treasuries.

carbonmutant's picture

When do they start taking responsibility for the Failure to Launch?

Young's picture

popcorn ready, bought som soda, some tobacco.... This is gonna be soooo... anticlimatc... Zzzz

MsCreant's picture

I just clicked an Amerisave ad on this site. 

Loans up to $417,000

                                        Rate    APR

30 Y Fixed                        3.75    3.991



3 Year ARM                       2.375  2.424

Loans up to $1,000,000

5 year interest only ARM  3.75    3.589

Don't know if I am laughing or crying, the gasps all blur together.

Then this:


30 Y Fix                            3.875    4.488

I know it has been insane for a long time, Amerigo Vespucci's funhouse, but man... How much evidence do we need that the whole thing is corrupt and will continue to be corrupt.

Sell a loan, pack up shop, and go. THAT is where the new businesses and jobs are bitchez!

carbonmutant's picture

It's all degenerating into "Piece work", paid by the task, custom made for the Twitter culture.

Tic tock's picture

..a drastic reduction in the money supply will cause interest rates to stay near zero; but debt issuance will also have to fall in absolute terms. ..we don't have the grain stockpile for that. The only logical course of action is a global emergency and rationing - unthinkable! and everything else is Chaos. ..i've only had one glass..

Young's picture

Only one glass!? I've had a fifth of scotch, and, right now wanking off to Leo's pictures of older women with big boobs...

DaveyJones's picture

pull yourself together..oh wait, you are

Tic tock's picture

..countries are bankrupt and have to buy grains.. it's possible to do it in volume terms, but distribution under severe deflation is inequitable.

Dismal Scientist's picture

As usual, its about time frames and risk appetite. Does anyone on this site doubt that the true fundamentals are a steaming pile of BP ? No, obviously not, and fair enough. Thats not really the point any longer though. I work on the basis that people come here not just to sound off about people who could not care less about them, but also to debate ways to profit from the current hand we are dealt. Endless debates about TPTB,TBTF and always buying PMs are getting stale.

Bottom up company evidence that I am hearing in Europe tells me that some M&A is back on the table and corporate health is in good shape. This is not bearish for stocks, even if people want it to be. Hard luck. Get used to being wrong for a while if QE2 comes on line.

That won't stop me hedging with cheap long dated puts mind you ;-)