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$35 Billion 2 Year Auction Prices At Fresh Record Low Yield Of 0.4%, 3.43 Bid To Cover

Tyler Durden's picture


Today's 2 Year $35 billion auction closed at a brand new record low yield of 0.40%, compared to 0.44%, and just over 1% a year earlier. the Bid To Cover of 3.43 was a drop from last month's record 3.78, but was still in the top 5 highest BTCs in history. Indirect bidders took 39.98%, leaving the balance to primary dealers and directs, the latter of which jumped by 50% from 10.78% to 15.90%, and only the second highest in 2010. Since the 2 year is now almost a functional equivalent of a money market issue, and since the Fed will soon be forced to buy as much of the short-end as it can get its hands on, this auction was not very indicative of much: auctions in the 7-10 year bucket continue to be the most critical (5 Year auction tomorrow, 7 Year on Thursday).


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Tue, 10/26/2010 - 13:21 | Link to Comment HarryWanger
HarryWanger's picture

Looks like the game is working. Keep trying to push people into equities via low yields. 

Tue, 10/26/2010 - 13:32 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

A game where people are pushed around from investment to investment?  My icon resembles that.

Tue, 10/26/2010 - 13:32 | Link to Comment GlassHammer
GlassHammer's picture

Its like watching a man push a crowd of barefoot people into a room full of mouse traps.


Tue, 10/26/2010 - 14:39 | Link to Comment chopper read
chopper read's picture


The "risk continuum":

gold <---> fiat <---> bonds <---> equities

whelp, cannot stay in fiat or bonds, so move left or move right. 

is MORE RISK now the most prudent decision? 

...I weep for retirees who will soon be facing the cold winter months deciding whether to pay the heating bill or to eat bread with their dwindling incomes and purchasing power. 

Tue, 10/26/2010 - 15:56 | Link to Comment More Critical T...
More Critical Thinking Wanted's picture

If you look at that graph then a more fitting title would have been:

"Hello Japan, hello deflation, here we come!"

Tue, 10/26/2010 - 19:40 | Link to Comment chopper read
chopper read's picture

please, explain.  which chart?  gold?  yen?  T-bonds?  2-year Treasuries?

i saw the yen break the daily moving average today, which may mean Japanese Central Bankers are going to fight price deflation through easy money every step of the way but, otherwise, what do you mean?

Tue, 10/26/2010 - 13:33 | Link to Comment SheepDog-One
SheepDog-One's picture

'Push 'people' into treasuries'....OH you mean Geithner and Bernanke.

Tue, 10/26/2010 - 14:39 | Link to Comment ZeroPower
ZeroPower's picture

Not so fast, with such a high BTC, the demand is there for the low yields.

Tue, 10/26/2010 - 13:24 | Link to Comment butchee
butchee's picture

Paper, Bitches!

Tue, 10/26/2010 - 13:26 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Just waiting for the money markets to drop below $1 (stage 11 in the series of catastrophic events, lesser importance than unwinding of 10s and 30s)

Tue, 10/26/2010 - 13:29 | Link to Comment Jason T
Jason T's picture

But college tuitions are going up 5% a year and jr. is "going" to college in 2 years.  .. or is he?  


middle and upper middle classes ... you are @#$%ed.

Tue, 10/26/2010 - 13:34 | Link to Comment SheepDog-One
SheepDog-One's picture

Yea Jr. will be attending the campus of 'School of Hard Knocks, 1940 Campus'

Tue, 10/26/2010 - 13:43 | Link to Comment plocequ1
plocequ1's picture

I cant wait. Im lubed and ready. Just go slow at first.

Tue, 10/26/2010 - 13:45 | Link to Comment DB Cooper
DB Cooper's picture

My experience is 7 - 8%.

Tue, 10/26/2010 - 14:34 | Link to Comment Shameful
Shameful's picture

Only 5%?  Where the hell do you live?  I've had the pleasure to see 15% increases followed by 8% increases.  Can't wait for the student loan system to die so we can get some sanity back into the education system.

Tue, 10/26/2010 - 14:04 | Link to Comment LongSoupLine
LongSoupLine's picture

No worries Jason T, my kids can always go to an APOL or STRA school...what's the worst that can happen???  \sarcasm off\

Tue, 10/26/2010 - 13:36 | Link to Comment tom
tom's picture

A comparison of yields at auctions and same-day or nearest-day Pomos would be interesting.

Tue, 10/26/2010 - 13:36 | Link to Comment SheepDog-One
SheepDog-One's picture

Last few days of BS money laundering until the mother of all corrections in early Nov. Just sayin'.

Tue, 10/26/2010 - 13:40 | Link to Comment Eureka Springs
Eureka Springs's picture

I wish I understood this type of post/information. Anyone have an informative link for dummies on this?


So the treasury/fed sells shit and buys it too? Where's the skim, and who the hell is buying into it beside the ponzi schemers?

Tue, 10/26/2010 - 14:12 | Link to Comment hedgeless_horseman
Tue, 10/26/2010 - 14:42 | Link to Comment ZeroPower
ZeroPower's picture

 Bond prices keep rising (yields keep dropping), if this wasn't due to demand then we would see a low BTC (investor bids versus the offers). As mentioned in the post, anything over 3 is pretty high.

The demand is there for any and all risk-free yield one can find. Read the TIPS post from yesterday, auction closed at -.55 yield. Those are a different security all together (linked to core inflation) but still, just shows demand is there for certainty.

Tue, 10/26/2010 - 14:53 | Link to Comment chopper read
chopper read's picture

the challenge for investors in TIPS comes when they figure out who is defining and calculationg "inflation". 


Tue, 10/26/2010 - 14:51 | Link to Comment buzzsaw99
buzzsaw99's picture

Bernanke: Do you have any twos?

B. Gross: No, go fish.

Tue, 10/26/2010 - 15:04 | Link to Comment trav7777
trav7777's picture

TLT down at the same time.

All your dollar are belong to us

Tue, 10/26/2010 - 15:07 | Link to Comment Grand Supercycle
Grand Supercycle's picture

DOW weekly chart shows the rising wedge contained within the megaphone pattern. This remains a very bearish picture and we should
get a breakout soon.

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