Weak 3 Year Auction Closes At Lowest Bid To Cover Since February, Highest Primary Dealer Participation Since February 2009
A very odd $32 billion 3 year auction has priced at a record low yield of 0.569%. The yield was no surprise, however the Bid To Cover, at 2.946, was the first sub 3 BTC since February 2010. And the most disconcerting aspect, is that the Indirect Bidder participation was a mere 29% - the lowest since January 2009. Which meant that, as can be seen on the chart below, Primary Dealers had to step in and buy nearly two thirds of the auction, or 59.1% to be specific. Less surprisingly, the still mystical direct bidders took down 12%, an increase from last month's 11.7%. In other words, clean demand for the auction was just over $9 billion, with the balance assumed by the Dealer-Direct HoldCo-OpCo labyrinth. While the migration to the right side of the curve by the Indirects was long anticipated and confirmed by Zero Hedge, today's results may require an extra close scrutiny of tomorrow's 10 Year and Thursday's 30 Year.