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Solid 5 Year Auction Follows Poor 2 Year; Dealers Left With Lowest Ever Allocation
What a difference 24 hours makes: if yesterday's 2 Year bond auction was weak from beginning to end, today's 5 Year showed that any fears of a "great vortexing" in the market can be largely forgotten. The 5 Year, which was expected to price 0.1 bps over 1.05%, and whose WI was trading at 1.048% at 1 pm, just priced at a stop through high yield of 1.045% - quite better than many had feared. The Bid to Cover also was hardly disappointing, coming at 2.79, just shy of the TTM average of 2.83. But the most notable component was the Dealer take down: if yesterday Dealers couldn't get their hands on enough bonds in the final allocation, today it was the Directs and Indirects that took down a combined 67.4% of the auction, leaving just 32.6% for Primary Dealers, the lowest in our dataset, and likely ever. Something tells us Dealers are very eager to load up on as many repoable bonds as they could yet failed: earlier today, the OTR 10Y CUSIP was among the Fed's exclusions in today's POMO, which brings the question - is the TSY collateral shortage starting to spread?
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Tick tock...
http://www.marketwatch.com/investing/bond/10_year
Here, hold this bag for a second...
So is this good news or bad?
In Benzarro world, good news is bad news and vice versa.
remind us, who are those "direct bidders" again. What is the total take by those in on the circle jerk? That's all that matters. Anyone else buying can be described as a bagholder. also, when is the next ten-year auction?
The one that matters is China. My guess is they are playing the flip to the fed game too.
Sure, but where's china in the data. Despite all this confuscation/corruption it looks to me like the credit markets are signaling that diminshing returns are taking their toll. The bottom line is still that sovereign debt must be bought or sovereigns and their currencies die.
you two are in agreement. it means the fed has to come in because there is no other bid. They did not spook stocks Doc. Stocks know it's QE4eva.
Sorry to piss on the parade route, but the yield conflict brewing between stocks and bonds, would cause yield chasing investors to abandon the shitty little dividend payers in favor of stable higher yield in bonds? I think that happened yesterday in the 10 year. What it would also seem to indicate, is that the "great rotation" has not occurred yet, since that rotation will be from stocks to bonds, since the yield will be much higher than the dividend payers. No?? So, that means fed "tapering" would decimate what's left of the stock market, because everyone would rush into bonds for the yield this time right? Hmm, .75 cents on the share, and all the bullshit that goes with it, OR, 5% on the time.
Taper.
Taper, taper, taper LOL!! Are we that lucky??
I'll just go ahead and burn what's left of the "great rotation out of bonds into stocks" theory, an leave the ring in the sink.
Aw, silly me, i had a Japan chart up..
Yes, by all means, taper away Ben.
of course it was gonna go off just fine. Can't have 2 bad auctions in a row; that signals a trend.
Rosengren announces they should keep QE4eva. I love how the fed is trying to hijack the yen selloff causing the move in treasuries and claim it has to do with tapering.
Just keep selling that yen and watch these cnbctards squirm.
China is buying pork bellies and not treasuries....they have a handle on hackers too.....