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Big Tail Highlight Of 10 Year Reopening Auction, In Which Direct Bidders Get Least Since August 2012
Moments ago the Treasury sold $21 billion in 9 Year-11 Month paper in today's 10 Year reopening of CUSIP WE6, which pricing at 2.824% was a sizable 0.7 bps tail to the 2.817% When Issued trading at 1 pm, and easily one of the bigger tails in the past year for the benchmark bond auction. And while the closing yield indicated a sudden drop off in demand into the auction, the internals were hardly as ugly, with a Bid to Cover of 2.61, below last month's 2.70 (and below the TTM average of 2.73) but hardly a cliff drop in bidside demand. Breaking the allotment by final purchaser, Dealer got 40.5%, in line with the 39.2% average, while Indirects took down nearly half the auction, or 49.8% to be precise, far above the 38.3% LTM average, and the highest Indirect allotment since the 51.7% from June. Directs were therefore left holding 10.6% of the auction, the lowest such portion since the 5.2% in August 2012. Overall, hardly an impressive auction, and one which probably reflects concerns what the taper could do for longer duration in the months ahead.
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Oh no... but but the $ is the reserve currency?
I know these Treasury auction articles generate very little readership..... but one of these days, that won't be the case. Tip of the hat to the Tyler that keeps grinding these out. It's thankless work, but someday it'll be a hot topic. That would be the day we have a failed auction and the Fed steps in DIRECTLY to buy what the rest of the world wouldn't.
True.... 30 year tomorrow. And the 30 year yield looks close to breaking out.
Earlier this year there was some concern about 'rates' exceeding 2.5%
Doug Short just published a chart showing that Bond Yield rates have been heading up since December, 2012. The 10 Yr has gone from 1.6 to 2.88%
See http://www.advisorperspectives.com/dshort/charts/yields/snapshot.html?yi...
My question is, where do these rates come from?
Are they newly issued Bonds? Not good for the Interest costs at Treasury.
Is the graph showing Imputed Rates (Bond prices go down & Yield goes up. Only new buyers of old bonds make out here)?
Probably a mix of both? An increase of 1 percent (1.6 to 2.88 10yr) doesn't sound like much until you consider that Billions of dollars of govt bonds will be paying 80 percent more cash for coupon interest.
If it's mostly Imputed Interest rates, we have to wonder how much the Fed's portfolio has decrased in value?
Any comments w/b appreciated.