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Strong 2 Year Auction Punctuated By Highest Bid To Cover In Over A Year

Tyler Durden's picture


In last month's 2 Year bond auction we highlighted that the end of the declining Bids to Cover trend has arrived for good, after the 3.54 BTC priced at the second highest since February. Today's just concluded 2 Year slammed the door shut on any fears that there may be declining broad bid side demand, after the Bid to Cover of 3.767 printed at nearly the same level as January's 3.675, but well higher, making it the highest BTC since last November's 4.07. The market demand at the time of auction confirmed this, with the When Issued trading at 0.352% at 1 PM, only to see the final yield on the $30 billion auction cross at a very strong 0.345%. Finally, the internals were just as strong, with Direct bidders taking down 30.24%, well above the November 27.3% and the TTM average of 23.5%, while Indirects took a slightly softer 21.55%, leaving Dealers with their usual fare of just around half, or 48.21% to be precise. Bottom line: if there was some concern in the recent 3 Year auction, the complete lack of market jitteryness today showed that the market is certainly not worried about any Fed rate hikes until after 2015.


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Tue, 12/17/2013 - 14:21 | Link to Comment Bryan
Bryan's picture

Sorry for my ignorance, but what does "bid to cover" mean, and is 'high' bad or good?

Tue, 12/17/2013 - 14:22 | Link to Comment Tsar Pointless
Tsar Pointless's picture

"High" is always good. The higher, the better, I always say.

Tue, 12/17/2013 - 14:23 | Link to Comment ArkansasAngie
ArkansasAngie's picture


Long weed companies.


Tue, 12/17/2013 - 14:35 | Link to Comment Tsar Pointless
Tsar Pointless's picture


Unfortunately, right now, I'm short on weed. Tsar Pointless sad.

Tue, 12/17/2013 - 14:22 | Link to Comment SAT 800
SAT 800's picture

It's the ratio of people who want to buy to people who suceed in buying; kind of measures the excess buying capacity of the market that's available.

Tue, 12/17/2013 - 16:48 | Link to Comment Bryan
Bryan's picture

So a high bid to cover ratio means there's more bidders than supply?  So the price would be bid higher then?  ... price of bonds I assume, which would mean lower interest paid on them?

Tue, 12/17/2013 - 14:19 | Link to Comment Tsar Pointless
Tsar Pointless's picture

A New Yer's resolution suggestion for Tyler(s):

- Cease using the word "market(s)" when referring to the United States. Or Europe. Or Japan. Or the entire goddamn world, for that matter.

Tue, 12/17/2013 - 14:20 | Link to Comment SAT 800
SAT 800's picture

Everybody wants the short term paper; meanwhile the long term bond has just managed to rally back to where I shorted it last week; and that's all it's got. I think I'm going to like this trade. Short Mar.14 Long Bond; ZB on the CME. Nobody wants them and they're already in a nicely defined down-trend.

Tue, 12/17/2013 - 14:23 | Link to Comment AccreditedEYE
AccreditedEYE's picture

In other words don't short this market expecting Fed Taper to crash asset prices. Or, if you simply can't resist, you can save yourself time by just mailing your money directly to some of the biggest hedge funds in the country. Much easier and lots less heart ache. 

Tue, 12/17/2013 - 14:27 | Link to Comment whatsinaname
whatsinaname's picture

Agree with you 100 % Accredited.

Also the Hindenburg OMENs only provide more pain in my abdOMEN !!

Tue, 12/17/2013 - 15:02 | Link to Comment JP McManus
JP McManus's picture

Marty: You don't know when to quit, do ya Griswold?... Here's an idea: Why don't you give me half the money you were gonna to bet, then we'll go out back, I'll kick you in the nuts, and we'll call it a day!

Tue, 12/17/2013 - 16:10 | Link to Comment eclectic syncretist
eclectic syncretist's picture

The Fed can kiss my big white tan-lined behind.

Tue, 12/17/2013 - 14:47 | Link to Comment Oldballplayer
Oldballplayer's picture

I read that fast and thought, "BTC? They are pricing bonds in bitcoin? What the hell did I miss?"

Then I came out of my daze.

Tue, 12/17/2013 - 14:58 | Link to Comment FieldingMellish
FieldingMellish's picture

Rate hikes, no. But since tapering is tightening, we could see a little of that and then a lot of not that.

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