Primary Dealers Save Weak 10 Year Auction

Moments ago the Treasury sold a fresh batch of $24 billion in 10 year bonds (CUSIP: VB3 - remember it: it will promptly be monetized by the Fed in the next few POMOs) in an auction that can at best be described as weak. The When Issued had been trading 1.80% moments before the announcement that the auction priced at a high yield of 1.81%: a 1 bp tail, and quite a bit wider than market levels in the 10 Year seen earlier today. The result surprised the market and pushed the bond complex lower. The internals were not good either: the Bid to Cover was 2.70, the lowest since February, and far below the TTM average of 2.96. Notably, as the chart below shows, the BTC ratio has been declining slowly over the past year. The Indirects took down 33.9%, below the average of 37.07%, Directs took only 16.9%, the lowest since January, leaving Primary Dealers with the lion's share or 49.2%, or well above the past 12 month average of 40%. And since correlation algos are pegged to see any bond weakness as good for stocks (as pretty much everything else too), the weak bond auction was an "trigger" for the algos to send the stock market to fresh all time record highs.

Comments

[firstdivision]

They should have gone long oil

http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=logarithmic&chdeh=1&chfdeh=0&chdet=1368043200000&chddm=56062&chls=IntervalBasedLine&cmpto=NYSEARCA:SPY&cmptdms=0&q=NYSEARCA:USO&&fct=big&ei=1IeKUaj1GqO30QHZTg

Hell even short-term is easy IOU's http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=logarithmic&chdeh=1&chfdeh=0&chdet=1368043200000&chddm=1554&chls=IntervalBasedLine&cmpto=NYSEARCA:SPY&cmptdms=0&q=NYSEARCA:USO&&fct=big&ei=pIiKUbDVCMWg0AHzrwE

[NotApplicable]

But how could the auction be weak when the whole world is fighting for "quality collateral?"

[buzzsaw99]

...the weak bond auction was an immediate reason to send the stock market to fresh all time record highs.

i'm thinking maybe that was [sarc.] on bitchez

[SheepDog-One]

$24 billion more debt right on the poors back just as easy as pie....well as long as Wall St banksters have a good day that's all that really matters.

[Hohum]

And, as everyone knows, ZHers are very concerned about the "poor."

[Bearhug Bernanke]

We, the Algorithms of the United Markets, in Order to form a more Perfect Monopoly, establish Profits, insure Wars, provide for the 1%, promote the general Debt Slavery, and secure the Illusions of Liberty, so ordain and establish this Constitution for the United Markets of Earth. 

[youngman]

why buy the 10 year when you can buy a junk bond at 5% or below.....lol....or Greek Bonds.....

[williambanzai7]

This must be a very low margin activity for primary dealers who would rather be offering prime brokerage margin loans to hedgefunds smoking Ben's hopium wackey weed.

[yogibear]

It's over.

It's just a matter of time until the US dollar crashes.

Bubble Bernanke, Evans, Dudley and Yellen are trying to control the crash as well as the other countries.

The US dollar is over-valued.

The Fed will not try and save it either.

[CrashisOptimistic]

The US dollar is not going to crash because there is no uncorrupted yardstick against which to crash.

They are smashing oil consumption to try to prevent the only true yardstick from asserting itself.  They will fail as consumption reaches a bare food transport minimum.

THAT is when it's all over.  Financial this or that is all bullshit.  Only calories and joules matter.

[bnbdnb]

Thanks Gundlach, go TLT go.

[vote_libertaria...]

Primary dealers aren't the suckers if Benny is buying back the bonds at 120% of par.

It's the stealth bailout.

Does ANYBODY know what price he is paying?