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4 Week Bill Auction Closes At 0.13%, Surge In Indirect Bidders As Primary Dealer Take Down Plunges
The US Treasury just auctioned off another $31 billion in 4 Week Bills. The auction closed at 0.13% high rate, with 93.14% allotted at the high. The high yield was the lowest seen since March 2010, and matched the April 27th auction. The Bid To Cover came in at a strong 4.51, compared to 3.87 previously. What was most notable was the explosion in Indirect Bidders in this auction compared to recent trends: indirects came in at 39.8% after taking down a mere 8.8% in last week's auction. The Indirect take down is the highest since March 23, when Indirects took down 43.4%. Oddly enough, the spike in Indirects was not at the expense of Directs, which at 16.3% was a little lower than recent take downs but still a far greater than the long term average. Oddly enough the Primary Dealer take down was just 43.9% - this is the lowest since the very first auction in 2010. Whether this has to do with quarter start asset rotation, or due to the massive SOMA take down of $6 billion, is unknown, but is certainly notable.
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Speaking of notable.
Ms Drury is knocking it out of the park today with that outfit.
http://www.cnbc.com/id/15840232?video=1511147735&play=1
euro pump
This is all fuzzy/behind-the-curtain stuff to me.
Could the dealer drop be because the MBS re-cycle has dropped off dramatically because the Fed has stopped purchasing (supposedly) and the housing tax incentive v2 has expired?
The dealers source of movable, bendable, slush fund money is slowing down?
That's a good theory to explain the lowered PD participation. Either way, the Fed was the ultimate prop under the scenario you described and now a scenario emerges whereby the the Fed has cut out the middle man (PD's). They reduced the number of steps for covert QE. Maybe this is what is meant by "efficient markets".
Couldn't this just be a flight to relative safety by foreign central banks? Even the abused dollar may look good right now compared to the euro and yen.
And all Fed.GOV had to do was ruin the Eurozone for this. A bargain, in their eyes.
The four week indirect was sure to be strong because it is four weeks until the HFI so they need to hold on 4 more weeks!
I got in on the indirect bid last week and got .157% , I chose not to participate this week and thank goodness I didn't. These yields suck ass. But, as I stated before, flipping the 4 weeks bills right now is the way to go, because there is nothing else worth buying out there, and it seems many others are seeing it the same way, hence the large indirect takedown and bid to cover. I bet we see trouble on the 7,10, and 30 auctions. No one wants that crap at those levels.
Is something looking bullish ?
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1