Highest Yield Since May 2011, Record Low Dealer Take Down, Make Today's 5 Year Auction A Whopper

Tyler Durden's picture

Following yesterday's uninspiring 2 Year bond auction, today's 5 Year issuance of $35 billion was a whopper. Because while it was known well in advance that today's closing high yield of 1.715%, which priced through the When Issued of 1.732% by 1.7 bps, would be the highest since May 2011. However, the stunners were all within the internals. First, the Bid To Cover of 2.99 was the highest since September 2012, and an abrupt turn in the recent general downward trend in BTCs - who would have thunk that all it took for greater interest in US paper was higher yields . But it was the takedown where the real shockers lay.

To wit, while Directs were awarded 23.1% of the final allotment, the third highest ever, and below the 23.3% last seen in May of 2013, it was the surge in Indirects, which rose to an all time high of 50.9%, well above the 45.2% TTM average, meaning Dealers in turn had the lowest allotment on record as well, getting just 25.9% of the final auction which could make future monetization of this CUSIP by the Fed problematic. Altogether a great auction, even if PIMCO, which had been buying the 5 Year in recent months has gotten creamed on the snapback wider in the bucket, where as reported previously, the 5s30s curve is the flattest it has been in ages.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Oh regional Indian's picture

Isn't the real key though when this will hit the connedsumer.

Interest rates are so elastic and they have so many levers, this game can be played a long time...

The Printing Press went from saviour to Nemisis in 600 years.


DeadFred's picture

The real humor is they conned enough people into thinking they're still going to be around in five years to get them to cough up 35 billion.

Oh regional Indian's picture

Exactly DF. And they have nto even issued the 300 year bond yet.

What to speak of the Millenial bond.

This game can continue, it is the real world that will "give" first...


xamax's picture

We see rstes as neutral in the future and thus see S&P500 hit 2400 by year end.

CrashisOptimistic's picture

Stop pimping with your imperial "we".

PlusTic's picture

Foreign central banks were all over this...they all love the fiat paper...

dcj98gst's picture

Using the fiat dollars to buy once removed fiat ious

Kaiser Sousa's picture

really. not the new big boy on the block...

LONDON — The Bank of England and People’s Bank of China reached an agreement Wednesday on clearing and settling renminbi trades in London. It’s the first such tie-up outside of Asia and is seen as further enhancing the U.K. capital as a Western trading hub for China’s currency.

The central banks will sign a memorandum of understanding on March 31, paving the way for the appointment of a clearing bank for the renminbi, also known as the yuan USDCNY +0.15% , in London.

“I’ve put such government effort over the last three years into making sure we’re the leading Western center for trading in the Chinese currency. That effort has paid off — and today’s agreement … is another major step forward,” U.K. Treasury chief George Osborne said in a statement.

Since China made Hong Kong its first offshore trading center for its currency in 2009, competition has been fierce among global and regional financial hubs to be key yuan markets, as Beijing tries to make the currency a serious rival to the dollar’s supremacy in global trade. Singapore and London have emerged as the leading candidates, with Tokyo, Sydney, Luxembourg and Kuala Lumpur also vying for a spot."


MillionDollarBoner_'s picture

Those pesky Indirect Bidders.

The FED in drag !;o)

CrashisOptimistic's picture

Yawn.  The 10 year just went south of 2.7%.  Relentless lowering of yields.

delivered's picture

It's those damn Belgiums again. They're just so evil. 

Boston's picture

The 10 yr yield is about to hit the 'death cross'. TLT has already seen a 'golden cross'.

Treasury rates are on the cusp of dropping.....a lot.

ebworthen's picture

Pretty sure there was an article yesterday about how Treasury curve flattening would kill the TBTF banks.

Yeah!  Flatten baby!  Flatten!!!

BiPolarFrenchman's picture

Can someone briefly explain the chart to me?