Largest Dealer Take Down Since June Saves Weak 30 Year Bond Auction

Tyler Durden's picture

If yesterday's 10 Year auction was stellar, today's 30 Year was anything but. With the When Issued market getting slammed by the flight from equities, and down to 3.61%, the high yield was an unpleasant 2 bps tail at 3.630%, putting to question the recent strength in demand for duration. The internals were also on the flimsy side, with the Bid to Cover of 2.35 higher than last month's 2.27, but below the TTM average of 2.42. Directs took down 12.6% below the 15.5% average, Indirects had 38.8% of the allotment, while Dealers were left with 48.6%, the highest since June 2013, and well above the 44.5%. That said, despite today's weakness, should the market finally crash as it is long overdue to do following months if not years of blindly ignoring the newsflow, the current level on the 30 Year will seem like a bargin in the coming weeks when everyone and the kitchen sink rushes, as they tend to do, into the safety of Treasurys once more.

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pupton's picture

What will Amurika look like in 30 years?  I'd take the under...

wallstreetaposteriori's picture

The current level in the 30 year will look like an amazing bargain when the shit hits the fan....  Everyone is affraid of negatives of duration and convexity because the entire market is convinced that yields can only go up... but what if they go down.... big money to be made going against all those short the market right now

pupton's picture

I know...lost my ass on TBT.  Won't do that again.  Silver for me from now on...bitchez.  I personally believe the dollar will not be the reserve currency of the world in 30 years, but I'm not sure if that makes a 30 Bond a bad buy today.

CrashisOptimistic's picture

2.66% on the 10 year, reinforcing the conclusion of grinding deflation underway.

ChargingHandle's picture

The plunge protection team will show up today 1.5 hours before the close and bring equites well of their lows. 

Sam Spade's picture

As Lacy Hunt has pointed out, in recent years interest rates are usually at their yearly highs between late February and mid-May (when economic optimism seems to flourish).  Rates then drop when economic reality sets in (or even better, some crazy geopolitical event or financial crisis occurs).  It’s a decent seasonal trade.


Judge Crater's picture

I think that big paragraph on the bond auction plus the graph have the makings of a good reading comprehension question on next year's SAT. 

Iam_Silverman's picture


Well, I am personally glad to see the PD's making such a wise investment.  If they weren't almost solid gold, would our president be recommending them for the ultra-safe MyRA's?