Stellar 10 Year Auction Stops 1.4 bps Through, Highest Bid To Cover, Lowest Dealer Award In One Year

Tyler Durden's picture


Moments ago the Treasury sold $21 billion in benchmark OTRs in the form of a 9-year-11-month reopening of Cusip B66, in a whopper of an auction that saw the high yield of 2.729% price 1.4 bps through the 2.743% When Issued. But more than just blistering demand at the pricing, all the internals were solid across the board: the Bid to Cover of 2.92x was well above the 2.54x from February, and the 2.68x TTM average. In fact, this was the highest BTC since March of last year. And in keeping with one year anniversary records, the Dealer Award was a paltry 29.1% which also was the lowest in a year. Indirects were 43.4%, down from 49.7% in February, which means that Direct soared, and sure enough they did, from 16.2% to 27.5%. Overall a stellar auction, and one confirming that the smart money continues to prefer allocation to fixed income, instead of believing the latest "growth stories" explaining away the second coming of the dot com bubble in Bernanke's centrally-planned farce of a market.

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Wed, 03/12/2014 - 13:19 | 4539383 Kreditanstalt
Kreditanstalt's picture

"Smart money"?  They can't seem to get enough of this stuff...the REALLY "smart" money isn't in paper at all.  It's in GOLD.

Wed, 03/12/2014 - 13:27 | 4539413 eclectic syncretist
eclectic syncretist's picture

Patience, my friend.  They will come to gold when they realize their safe haven bonds aren't so safe after all, as they are in a monster bubble too.....

Wed, 03/12/2014 - 15:06 | 4539860 Soul Glow
Soul Glow's picture

Safe haven bonds were sold primarily to Direct bidders and Private Dealers.  The Indirect bids - CHina et al - stayed out of this one.  This really wasn't a solid bond auction when accounting for that.

Wed, 03/12/2014 - 13:31 | 4539430 youngman
youngman's picture

Who is going to buy the Candy game IPO....several billion for a game are stupid

Wed, 03/12/2014 - 13:31 | 4539431 buzzsaw99
buzzsaw99's picture

With rates so low nobody wants to pay those maggot bankers a commish.

Wed, 03/12/2014 - 13:33 | 4539433 4shzl
4shzl's picture

Moar dew-RA-tion -- do it now.

Wed, 03/12/2014 - 15:07 | 4539865 yrbmegr
yrbmegr's picture

I'm rotating as fast as I can.

Wed, 03/12/2014 - 13:33 | 4539436 skwid vacuous
skwid vacuous's picture

Off topic: HLF halted, Ackman just queefed a little nothing a trip to the "men's" room can't fix...

Wed, 03/12/2014 - 13:37 | 4539456 yogibear
yogibear's picture

At the right moment Russia and China will send back all the Fed's fiat. Obama and the Fed better watch what they set up. 

Wed, 03/12/2014 - 15:10 | 4539880 Soul Glow
Soul Glow's picture

They have been for years.  China and Russia have decreased their Treasury holdings by half when accounting for the increase in debt issuance.  To put it nominally, China and Russia have the same amount of USTs they had 6 years ago, but the money supply - the world's supply of dollar denominated fiat in the form of all the world's currency - has doubled.

The end game for the current financial system, based on the psuedo-science of Keynes' economics, is in the last innings.

Wed, 03/12/2014 - 13:50 | 4539498 The Most Intere...
The Most Interesting Frog in the World's picture

and how much demand from Brussels???  Just curious, anybody know?  and we are referring to IMF buying this stuff...correct???  I seem to remember an article recently identifying buying from Brussels - replacing China...  Enlighten me ZH...

Wed, 03/12/2014 - 15:11 | 4539887 yrbmegr
yrbmegr's picture

Anything to avoid deflation in the EU, I guess.

Wed, 03/12/2014 - 13:59 | 4539539 SheepDog-One
SheepDog-One's picture

I'll glady owe you nothing tomorrow for a paper hamburger today!

Wed, 03/12/2014 - 14:05 | 4539564 HpDeskjet
HpDeskjet's picture

I will repeat it once more: "If QE stops (or pauses), bonds will rally, risky assets will tank". It's that simple. For now, the FED seems determined to stop QE by the end of Q3 (5 more meetings = -55bln). There is still way too much hope in the markets that the FED might taper the taper or even increase bond buying but once this mood shift (i guess 1 or 2 more FED meetings away), it will get ugly for risky assets

Wed, 03/12/2014 - 14:39 | 4539702 JPM Hater001
JPM Hater001's picture

I get 99% of ZH material and the general bond nature but can someone explain a few items that even wiki can't seem to get into my noggin

1) 9-year-11-month reopening of Cusip B66 -I assume this is just an issuance identifyer

2) What is the difference between "high yield of 2.729% price 1.4 bps through the 2.743% When Issued"

Who gets the 1.4 bps?

Bid to cover? Bid to Cover of 2.92x was well above the 2.54x from February, and the 2.68x TTM average. 


Thank you.

Wed, 03/12/2014 - 14:51 | 4539782 HpDeskjet
HpDeskjet's picture

1) yes, an existing bond they "tap" = increase amount issued, i.e. borrow more

2) Because of the demand, the "offered" 2,743% yield was too generous and ppl bought the bonds at 1.4bp lower yield instead. In this case you could say that the government gets the 1.4bp since they have to pay less money to borrow

3) they issued 21bln, but there was 2,92 x 21bln demand = roughly 60bln and this was more than the TTM (i think is 12-month) average of 2.68x

Wed, 03/12/2014 - 15:03 | 4539849 Soul Glow
Soul Glow's picture

Free money from the Fed!


Wed, 03/12/2014 - 15:48 | 4540064 ebworthen
ebworthen's picture

"...instead of believing the latest 'growth stories' explaining away the second coming of the dot com bubble in Bernanke's centrally-planned farce of a market."

Thanks for that - perfect summary.

Wed, 03/12/2014 - 15:52 | 4540090 starman
starman's picture

Money is gold! Dollar is just a reserve note! Dont ever forget! 

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