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Bid To Cover Jumps In Strong 2 Year Bond Auction
If one of the biggest concerns in early 2013 was the progressively declining Bids To Cover in US Treasury auctions, the past few months have seen a halt in this trend, while today's auction of $32 billion in 2 Year paper marked a substantial return to the high-flying BTC day of yore when the just completed 2 Year auction not only priced strongly through the 0.303% high yield, pricing at 0.300, but more importantly, at a 3.54 Bid to Cover, a jump from October's 3.09, and the second highest since February excluding only April's 3.63. Curiously, the drop in the overall Bid To Cover (as can be sen on the chart below) correlates closely to the drop off in Direct take downs in the first half of the year. This too has reversed in recent months with Directs getting 27.28%, Indirects holding 22.47% and Dealers left holding just over half, or 50.25%. Over the next few days it will be revealed if the same rising BTC trend is sustained in the other near-term vintages, the 5 and 7 year auctions also due out later week.
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Did someone say rising BTC? Looks steady at just over $800 per coin...
good article in the WSJ on using a BTC "index fund" to hedge against inflation. i think that could cause a major correction in BTC in the short run if such a fund were created since that would be real money flowing into the virtual currency for the first time. (90% decline sounds about right to me.) having said that that would create a real value in the virtual currency for the first time. should create some fancy pants ATM machines going forward as well. once vendors start accepting bitcoins as currency (they already do in many places) you could see some wild swings in the debt markets as commerce begins to repudiate fiat money as a medium of exchange. everything will still be "priced" in dollars in my view...in other words your five dollar cup of coffee and a bagel will still be a five dollar cup of coffee and a bagel...prices could actually fall and fall dramatically actually depending up on this thing plays itself actually. should be interesting to see what happens. stay tuned...
Yellen comments soothing the short term. Looks like 30 year bond yeilds about to break out.
Indeed, winning? not so much...
tick fucking tock.