$36 Billion Three Year Auction Closes At 1.22%, 3.23 Bid To Cover

Tyler Durden's picture

Today's 3 Year $36 billion Auction closed at a high yield of 1.22%, with a 3.23 Bid To Cover, which was the third highest ever recorded, after a 3.27 in May, and the record 3.33 in November. The auction saw a fairly "new normal" distribution in which 16.3% was taken down by Directs (also the third highest on record), 46.7% by Indirects, and 37% by Primary Dealers. The Hit Rate for the Primary Dealers came in at 17.59%, also unspectacular. Overall, a mediocre auction.

The ever-increasing portion of the Direct Take Down is shown on the chart below in red.

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SRV - ES339's picture

So when do we put HAL back to work... "He's getting antsy Dave!"

fuu's picture

What are the implications of the $26 Billion FIVE DAY CMB? 0.16% for 5 days.

Cognitive Dissonance's picture

This is getting down right silly. They shoot horses, don't they?

SayTabserb's picture

Looks solid to me.  We're the envy of the world.  People actually show up at our auctions, or at least Virtual People conjured out of thin air by the Fed.  Who really thinks that a 1.22% return over 3 years is a good idea?  I just don't get it.  How do we get people to keep playing this game?

monmick's picture

How did Santelli rate it?

Sir Vivore de Apocolypse's picture

Now if I was uncle Ben, I'd be using all this market uneasiness and risk of deflation and my secret un-auditable status to print away the national debt using the indirect bid. At 30% of the total auctions and a 2.5 year average treasury maturation it should only take 2.5 years to pay off 30% of the national debt. Then when all seems lost, Ben shows his hand and the US realizes that it now owes 5 trillion of its 15Trillion debt to it's own inhouse Federal reserve and promptly writes the debt off the books and all is well.

Rick64's picture

Okay auction is finished back to propping up the stockmarket.

Mark Beck's picture

I was not sure where to post the link, but Arthur Laffer had some interesting things to say:


A quick summary:

Here’s what’s happening on January 1, 2011 if the Bush tax cuts are allowed to expire:

  1. The highest income tax rate will go to 39.6% from its current 35%
  2. The highest dividend tax rate will go to 39.6% from 15%
  3. The capital gains tax rate will go to 20% from 15%
  4. The highest estate tax rate will go from 0% to 55%
  5. Payroll taxes will rise
  6. The Alternative Minimum Tax (AMT) will increase
  7. There will be a tax increase on “Cadillac” health care plans
  8. State and local tax rates are going up again, as they did in 2010

Some more info on Mr. Laffer.


Basically, Laffer sees a pull ahead effect which will kill FY2011 tax revenues.

This is a possibility, especially for IRA conversions.


I consider the Laffer Curve to be valid for what we will see in enacting austerity measures when forced to balance budgets at the federal level. Being, the increase in tax will not produce a corresponding increase in revenues, because its real effect will be to reduce available investment and by extension growth. It is this reduction in growth which will reduce revenues even though rates have gone up. The net effect is negative real growth.

How can this be, if I increase a % on income won't I get that in revenue? 

To the simple mind, yes. But, economics, productive economics, is not simple. As it turns out we need really smart people to create legislation that can increase economic growth. These kind of people are not politicians.

Another example of political main stream thinking cultivated by the financial elite, is the concept of Debt to GDP as a measure of ..... stupid?

Everyone who is somewhat smart about personal finance knows that paying interest to somebody for using money is foolish. Interest on debt is the most egregious use of ones resources.

So what we have is a measure, Dept to GDP, conceived in perpetuity, of always paying interest which relates somehow to our ability to handle our sovereign finances. No, it is a measure of why we cannot handle our sovereign finances. Any debt that you pay interest on is bad, every dollar wasted.

So in being economically savvy you need to understand the real impact of your decisions, both politically and at the FED.


At what point will interest and FED obligations produce real negative growth. TODAY!


The DC and State tax collector image, the politician mental picture, is to see the American people as a limitless taxation resource. This is a very dangerous view if the goal is economic growth.

The facts are here if you care to look for them. We could ask why do we not see an increase in net revenue after enacting ARRA? How can this be? It means politicians do not understand the mechanics of economic growth. They seem to be unable to tally how debt, and the inability of Government to efficiently apply investment, can produce a reduction in growth.


If you want prosperity for your people, you had better make sure that a dollar borrowed will be paid back, and that any interest paid is offset by a net gain in positive growth. Because, if you cannot do this, you should not be in a position to legislate such obligations upon the people.

Mark Beck