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Bid To Cover Slides, Primary Dealer Takedown Surges In Weak 2 Year Auction
Moments ago the US Treasury sold another $35 billion in 2 Year paper in what can only be classified as one of the weakest 2 short-end auction in the recent past. While the high yield rose notably from 0.233% to 0.283%, it is still at negligible ZIRPy levels associated with Bernanke's extended promise to keep the short-end as virtually equivalent to cash currency. With increasing rumblings that the Fed may be tapering, tightening, and otherwise pushing the short-end higher over the next two years, there was little such fear manifesting in the auction's yield which telegraphs nothing but smooth sailing for the next two years in terms of where Bernanke sees yield: perhaps a better indicator will be demand for the 3 Year auction next week which is seen on the cusip of the ZIRP time barrier.
That said, the internals were ugly, with the Bid to Cover sliding from 3.63x to 3.04x, the lowest since the 3.03x seen in February 2011. But it was the general abdication by Direct bidders, who took down a tiny 12.6% of the auction compared to a TTM average of 21.58%, and the lowest since July 2012. Same with Indirects who were left with just 21.93% of the allocation, meaning Dealers had to end with 65.47% of the auction. This was the highest Dealer take down since April 2009. Oh well: at least they will have plenty of "money good" collateral against which to rehypothecate and use the cash proceeds to buy stocks and other risk assets, at least until such time as the Fed proceeds to monetize this paper as well.
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Must.Keep.Gold.Under.1400
...and keep a bid under bonds, all the while not trying to force those fix-interest retirees to eat cat food. Okay, maybe not the last one so much. Something's got to give...
You need to put a little fear in the market benny so that you can get a bid in treasuries.
It looks like he did. I see the dow backed off and yields dropped in response.
Engineering "collapse 2.0" run away! Run away! (back to the default settin? We shall see.)
You mean "monster bid in lumber futures." oh, wait. Those prices are and along with it inflation expectations...if not inflation itself (deflation.) time to start raising rates? I say go for it of course (SA is pounding the table on it.) still..how about we pull a "wait and see" on Japan first. If that equity surge turns into a bond market as everyone is claiming here then we should get a better idea of what going full on Ruby Tuesday really means.
Sorry, but I thought America was past the debt ceiling date?
/sarc
Santelli said there is a 35% we close in the red today.....I agree with him....the Bonds is where the world is now....they are the canary..and it sounds to me like he is choking....
He does have a 6th grade Jethro education by his side.