Direct Buying Soars, Indirect Plunges In Today's $21 Billion 10 Year Reopening

Tyler Durden's picture

The last time we saw a 10 Year auction with comparable confusing internals, it was in July, when in a bond issue that smashed virtually all record, the sold 10 year paper in what we then dubbed a "WTF auction." Today's 10 Year $21 billion reopening, while maybe not quite as stunning in all categories, and coming at a yield of only the third highest in history or 1.65%, certainly had enough drama in the internals to qualify for the designation of WTF 2.0. It wasn't the Bid to Cover either that made it remarkable, which at 2.95 was higher than November, but well below the TTM. What truly set aside this reopening was that the Directs, continuing on yesterday's surge, took down a massive 42.7% of the auction: only the second highest since the July 45.4%. The flipside of course is that Indirects were left holding 24.2%, or the lowest Indirect take down since April 2009. Why did this dramatic inversion happen? Why the collapse in Indirect bidder interest (only $6.6 billion in bids tendered for an allocation of $5.1 billion)? It is unclear, for now.

What is clear is that the category called as Indirects is showing progressively less interest in US paper, and Directs have to step up and so far they have. Is this merely a spike in buying ahead of the Fed, and thus a hope for a quick flip? Stay tuned - we will find out in January when the next 10 Year should finally confirm whether or not Directs are the new Indirects (and the new monetizing Fed is still the old monetizing Fed).

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Big Slick's picture

This really is a MUST WATCH.  Only problem is it's 2.5 hours long.

Remember Ann Barnhardt?  Her presentation The Economy is going to Implode and You Deserve to Know Why is WORTH EVERY SECOND:

CPL's picture

She's still kept her looks.  Probably because she jumped when she did so she could sleep at night.


It's long...still listening.

Savyindallas's picture

It's hard to take her seriously if you listen to some of her hateful anti-Muslim bashing. She'll go on and on with vile , hateful slurs on Islam, citing all these Koran verses to show that Mohammed was a homosexual and pedophile  -then when you go look up the Koran verses she cites  -they say nothin at all to substantiate her slurs. I think she's a total Neocon wacko.

CPL's picture

It was hard to watch, the anger and fear radiating from her was surprising.  I recall watching her do some stuff when she closed her shop, she seemed pretty lucid then.  But the born again Christain thing with the ideological pissing contest was my "wow" moment.

She's picking a side and attempting to position it as the middle, which it isn't.  It's buying into the system, to fight the system is to help it.  She's been a trader all her life and I'm not sure where she drifted mentally or if she's had a really bad break up with a Communist Muslim, but she's been sucked into the black hole offered by TPTB.

She's taken the bait hard; and now ended up in the position that she is fighting the line and not the situation.

Augustus's picture

The Ayatollah Khamanei and Ayatollah Khomeini have given instruction for procedures to deal with the screwed goats.  Both advocate marriage of nine year old girls, as practiced by Mohammad.  Reporting that is not a hateful slur.

Rathmullan's picture

Yes, this means something to readers of ZH but what are the consequences? None, other than that the suppressors have to take their suppression game up a notch..and they will.

Meanwhile, It's awfully quiet out there. Europe is "fixed" and the U.S. "fiascal" cliff is old news and no longer represents a threat because the europeans have taught us that not only do defecits not matter, nor debt at multiples of GDP, nor fiscals cliffs -- because the central banks are there to buy up the debt with "money" created out of thin air. Expectations of any consequences from that model have been quashed through financial suppression. I suspect that S&P has had the living shit kicked out of it by the fascist statists and even if it were to do its job it has already been made an irrelevant fool of an organization by the financial suppressors (forget moodys, its just a tool of the whoracle of omaha-ha to distort reality and drive performance for berkshit halfass-way). The fact that the world economy is treading ground never treaded is simply irrelevant...until it is. So far now, the only thing to disrupt the shear market bliss out there are such things as politician assassinations and terrorist acts. But those are lost risk one off events right? But it's just too damned quiet out there. 

Big Slick's picture

I see Ben being played by Michael Keaton: "You want to get nuts?  LET'S GET NUTS!!"

1eyedman's picture

why?  its already wednesday...repo swap roll isnt until tuesday..

Flakmeister's picture

Me thinks you mean third lowest yield....

I think it is mainly front running the Fed, i.e. BAU: another back door bail/hand out....

FL_Conservative's picture

That's EXACTLY what's going on.  Direct bidders KNOW that the Fed is going to be monitizing the bonds and will buy them at higher prices down the line.  What's scary is the significant DROP in interest on the part of the internaltional community.  I guess fewer and fewer want to buy any of our stanky debt.

vote_libertarian_party's picture

"Why the collapse in Indirect bidder interest?"


It's called Econ 101, The Law of Supply and Demand.


As the supply of an asset is created with a water cannon and demand plateaus, or drops, the price drops.  


The Fed has delayed this for 3 1/2 years but not for much longer.

LawsofPhysics's picture

Glad I front ran this on monday and tuesday.  Will close this position today even though it may be worth holding.  The manipulation (read financial repression) is more transparent but coming faster and harder now.

tooriskytoinvest's picture

Signs Of A Stock Market Sell-Off: Inflation Expectations Are At 17-Month Highs, Baltic Dry Plunges By Over 8% Overnight, Most Since 2008, Cliff' Talks Getting Worse, Not Better, And  IMF Warns Of High Risk of A Housing Market Crash In Hong Kong

Mr Lennon Hendrix's picture

Don't worry, Bernanke will handle this.

govttrader's picture

I think it more likely that a number of previous indirect bidders have decided to bypass the primary dealers, and rather are bidding directly to the US Treasury itself.  I've been through the process, and while it takes more than 5 minutes...if you are a large enough institution, the process is relatively straightforward.  Why would a large institution that gets good "sales coverge" from the dealers want to bother with the hassle?  Well, if you are a "large institution", then your "large bid" will be used by the dealer to try to "figure out" what the auction result will be and front run you.  This is no easy task, and the dealers don't always get it right; but if you were the guy at CALPERS, PIMCO, WAMCO, or some other large institution, you wouldn't want to give that info to the dealers either.  Its like playing texas holdem and showing one of your cards to your neighbor...not the best strategy.  I'm honestly surprised that this hasn't happpened sooner.

LawsofPhysics's picture

Spot on.  The TBTF banks and primary dealers are in deep shit this time around.  Look at what Jamie and Loyd have been up to lately, they are both on the PR missions right now.  Don't get me wrong, they will still get a bailout, but blood sacrafices will have to be made this time around.

FL_Conservative's picture

Good points.  It would be nice if we knew this for sure.

holdingontomypants's picture

ok.for those in the me out with my education on this and tell me what the difference is between a direct bidder and an indirect bidder. Then mabe I can better understand the impact.