Weak 3 Year Auction Closes At Lowest Bid To Cover Since February, Highest Primary Dealer Participation Since February 2009

Tyler Durden's picture

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.

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HarryWanger's picture

Stocks reacting a bit positive toward that. Of course, stocks act a bit positive toward anything.

carbonmutant's picture

Sounds like a Pollyanna market...

Cognitive Dissonance's picture

The "all is well" illusion is still holding Tyler, though it's getting a bit shaky. But we must always remember that it's not the captain nor crew that's keeping the Titanic afloat. It's the 1st class passengers who are keeping the old girl from sinking solely by strength of desperation.

We can all muster enough courage for several trips alone through the gave yard. It's an entirely different matter to keep a steady nerve when nearly everyone else is running in the opposite direction. The longer this goes on, the more jittery the elite become. Contrary to the popular notion that the longer a trend holds, the stronger it is, the longer the USA can maintain the illusion, the more likely it is that the natives will bolt for the door at the first sign of Casper the friendly ghost. 


DUNTHAT's picture

With all the studies out showing the minimal impact QE 2 will have on the economy, is  the Fed capable of dumping all of that QE leverage into the stock market -- exclusively -- creating a massive stock-wealth effect bubble-- that lifts not only the stock market, but the housing market, and the commodity market, re: late 90's early 2000.  From their perspective, down the road, it would be easier to deal with a hyper inflated stock bubble, than a hyper deflated economy.

BorisTheBlade's picture

It's the 1st class passengers who are keeping the old girl from sinking solely by strength of desperation.

Nevar forget: http://en.wikipedia.org/wiki/RMS_Titanic#Survivors.2C_victims_and_statis... , there won't be enough lifeboats for everyone, so this old lady is kept afloat only until those who deserve to be on them take their seats.

crzyhun's picture

Is this a QE2 indication? AS in why load up when when it hits the rocks these will too?

tahoebumsmith's picture

More freshly printed cash going out the back door at nearly 0%...This old man, he played ten.He played knick-knack once again.With a knick-knack, paddy whack,Give a dog a bone.This old man came rolling home.

themosmitsos's picture

When you're the US, you can have failed auctions without them being failed auctions, unlike lil ol Greece

trav7777's picture

I guess the Households out there gobbling up all the bonds were just on vacation still...

buzlightening's picture

LOL! Dog ate the bids!! Nothin but Dinkers! Dollar inkers to infinity!!

shushup's picture

So have indexes been at a complete stand still for the lat 2.5 hours waiting hear the lat Fed Minutes? Those minutes are so "Last Year" considering all the fed blabber mouthing that's been going on for the last two weeks.

HarryWanger's picture

And off to the races we go. As I said, everyone acts "surprised" when Fed says they discussed QE2. Now markets react as if they never thought it was possible. LOL!

AccreditedEYE's picture

They cannot pump risk assets and continue to believe they can keep the ponzi financed thru treasuries. They have no option... if they want to stay alive they need to NOT allow QE. (And the hole treasuries will leave in bank balance sheets on rising rates....)

DarkMath's picture


Can you guys start a Internet Video news channel to compete with CNBC? I'm sick of watching CNBC. I want to vomit.

If ZeroHedge could go video and give CNBC competition I think we could turn this once great nation off of its present course.

RobotTrader's picture

Way too many "pros" trading on fundamental macro themes are short and spitting up blood.

And they refuse to close their trades.

An example of one such person found here:


Note the smug arrogance in his voice.

No wonder short interest is skying.....too many are very negative on the market right now.


reading's picture

Ha, and your smug arrogance? Face it robo everyone thinks they're right.  Only time will tell.  And where, exactly, are you finding all these "very negative on the market?" If anything you can find those that are apathetic...most have no day to day feelings on it at all.  

Jim B's picture

Dear Ben

    No you can not use my money and pay me 0.569%!


whatsinaname's picture

Dear Jim

I understand your concerns. Wait till I pay you 0.2% and sorry but your money is really my money.


Robslob's picture

As long as "people" are buying stocks there is no bubble...I mean market...uh wait I meant....