No Rotation Here: Buyside Demand Soars In 10 Year Treasury Auction

Tyler Durden's picture

Those expecting to see any indication of that mythical, if completely non-existent rotation out of bonds into stocks (which is really originating out of money markets and savings accounts, and has already tapered out), will not find it in today's US bond auction, which saw the Treasury sell $21 billion in Treasury paper at the low, low yield of just 2.029% (70.31% allotted at the high), below February's 2.046% auction yield, and stopping well inside the When Issued of 2.053% at 1 PM, indicating massive buyside demand and confirmed by all the internals. The Bid To Cover jumped to 3.19, the highest since October's 3.26, and far above the TTM average of 2.96. The Indirect take down was a massive 47.7%, the highest December 2011, when it printed at 61.9%, leaving 30% for Directs, and a tiny 22.3% for the Dealers, which was the second lowest Primary Dealer take down in history, higher only than July 2012's 14%. Overall a whopper of an auction, and confirmation that if anyone has lost interest in frontrunning the Fed, they sure were not in today's auction roster.

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madbraz's picture

In the absence of QE, 10 year yield would be below 1.5%.  

Dr Paul Krugman's picture

The Fed is doing a good job of keeping rates low, but they could do better.

just-a-girl's picture

In your view, what factors are most responsible for the soft demand for money?

Dr Paul Krugman's picture

High unemployment, low growth, etc.

just-a-girl's picture



We need to discover a New World. 1492 style.

But, more seriously, considering the amount of invention that has taken place in the last 100 years, it must be unparalleled in all human history.  Consider all the things that humankind has invented over the last 100 years.  Cars, airplanes, running water, washing machines, radio, tv, computers, space travel, etc...  The rate of human invention and productivity was unparalleled.  Unparalled human invention drove demand and job creation.  But, what more is their to invent that we want or need that we don't already have?  And what is an appropriate role for economists to promote if demand is in a long term staganation and public and private sectors face over indebtedness?  

From my perspective, the debt requires servicing, which consumes money that would otherwise be spent on investment and consumption. As the debt service rises as a percentage of your income your ability to drive economic expansion decreases until it reaches the point that additional debt actually makes the economy worse rather than better.

Ben Jammin Bernanke's picture

Unemployment is down to 7.7%. You're just bitter because you can't hold a stable job.

Tsar Pointless's picture

Stawks green.

Mission accomplished!

q99x2's picture

Bonds are good so the politicians think everything is ok. Hahahahahahahah. We need robot politicians that the public can program.

SheepDog-One's picture

Just get a bunch of hologram generators to fill clowngress....same basic worthless result except you wouldn't have to pay them bribes.

3M Virtual Mannequin - YouTube

daveO's picture

Too late, they're already programmed by the Banksters. End The FED.

HD's picture

When I gets all grown up - I'm gonna frontrun junk and stuff too.

SheepDog-One's picture

Only ones 'rotating into stocks' is Primary Dealers churn machine.

max2205's picture


Ben thought it was time to do the bond put


He was about to lose control of the long end

NeedleDickTheBugFucker's picture

Jeff Gundlach said recently he was a substantial buyer of the 10-year when the yield was over 2.00%.

SheepDog-One's picture

YAY we *heart* bawnds again! Give us da guaranteed .01% EZ Moneez!!

boeing747's picture

Important News! Tyler: Direxion Funds just announced that several its ETF funds will go thru reverse split including NUGT(1 for 5). Looks like they start to close gold windows, this action will make NUGT harder to trade.

busted by the bailout's picture

BTW, what's the record for the # of consecutive record high days in the Dow?  Are we there yet?

It is only fitting of a QE to infinity market that we set that record too.

CrashisOptimistic's picture

The "money on the sidelines" is waiting to get into bonds, and this terrifies them.

Someone here a few days ago said "they are desperate for retail to come back because the PDs have HFTed this shit to the stratosphere and are desperate for someone to unload it on."  It ain't happening.

mirac's picture

Does the lack of Primary Dealer buying indicate that they are choking on what they already have?

DrDinkus's picture

just indicates the indirects and directs took down a larger percentage, could be some shorts heading into the auction, but more likely big money that thinks the next 30 days wont be so rosy as 30 40+ days in the DJIA....hey bob pisani, GFY

Dr Paul Krugman's picture

We don't want the 10 Year Treasury Note above 2%.  We want bond prices to stay elevated; we must increase the purchases.

Bonds have already lost about 7% of their premium since last summer.  If we move to a 3% yield then the premium will have lost almost 20%.  This will be bad for all pension funds that hold bonds. 

We need to shore up liquidity - we need to increase the amount in the monthly purchase program.

fonzannoon's picture

The pension funds absolutely want higher yields. Much higher yields. I would tell you to get a clue, but I believe you have one, which is why you are just evil.

Seeing how much time you spend on here, you obviously have a lot of free time. When are you going to crawl out of your hole and debate Schiff? You can bring your glass of scotch.

Dr Paul Krugman's picture

Tyler posts better financial data than cnbc and Bloomberg, so I have Zero Hedge on my reading list.  I have had plenty of debates lately, and I am sharp as a sword.

NotApplicable's picture

LOL You're really starting the get the hang of this trolling thing.


ebworthen's picture

Ms. Nixon from Northern Trust says they are getting out of gold and overweight risk assets because of this great economic recovery.

Oh yeah, future's so bright - I gotta' wear shades (or is it my gold?).

fonzannoon's picture

I remember when they announced they were buying gold. Everyone was jumping up and down at the thought of everyone else doing the same. Just like everyone jumps up and down when the Japanese pension fund adds .000001% to their holdings or Pimco does the same.

yogibear's picture

You smell some Sushi burning? It's Japan. The US is not far behind.

Once the rest of the world starts dumping US dollars it's over. The Fed can buy all it wants, if the rest of the world no longer takes declining US dollars you'll see those rates spike. 

For now the Fed can play it's fiat games.

daveO's picture

A chart on here last week was very important, regarding the dollar. It showed that the FED has already purchased the legal limit (70%) of many Treasury issues. It took a while for it to soak in. If they can't buy any more issues, they'll lose control of interest rates. Panic will set in shortly.    

ozzz169's picture

dont get in a hurry, first japan goes... people flee to us bonds... as usual, rates go negative, then euro goes... same thing, then in maybe 10-15 years from now the US goes if things dont change but there is a hope us can still turn it around granted I would not bet on it even if you give me 10-1 odds :).   as kyle bass says, "short the yen, buy gold and you will be ok"