Strong 30 Year Auction Prices At Lowest Yield Since June

Tyler Durden's picture

Yesterday's 10 Year auction may have been surprisingly weak, perhaps concerned about what the subsequent FOMC minutes would reveal (as it turned out the minutes couldn't have been more dovish - just as everyone knew would be the case - and sent 10Y yields sliding) but today's 30 Year reopening (Cusip: RE0) auction was quite brisk, with the high yield of 2.535% stopping through the When Issued of 2.537% by 0.2 bps. And for those who have been living under a rock and unfamiliar with the epic flattening in the yield curve, today's 30 Year was the tightest pricing since the 3.36% yield last seen in the auction from June 2013.

Other internals: the Bid To Cover rose to 2.52, the highest since January, while the allotment was roughly in line as expected with Direct Bidders taking down 17.9%, Indirects 43.3%, and leaving 38.8% for the Dealers who can't wait to flip this CUSIP to the Fed as the end of QE rapidly approaches (at least until the S&P "crashed" by 10%).

The full breakdown:

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Two-bits's picture

I don't want to hear about bonds!!!


Cash America's stock is up over 12% on the day.  Payday loans for everyone!!!


Does EBT cash count favorably towards debt-to-income ratio for a micro-loan?

El Vaquero's picture

Bond yields down?  The stock market must be down.  IMO, they're going to let the stock market crash in order to herd "investors" into the "safety" of US Treasuries.  Gotta keep those yields down somehow, and just printing money has predictable results.  Up after this:  Bail-ins and theft of retirement accounts through shit like MyRA.  If it doesn't break before that.  I think that's the extent to which the can can be kicked.

thamnosma's picture

The entire economic and social structure is now utterly dependent on low interest rates forever.  I am somewhat awed at their ability to engineer this seemingly in perpetuity.  Though, of course, nothing is perpetual.  

Just imagine the consequences of 6% 30-year rates....or 8, 10, etc.  Certainly would end the fantasy of a "housing market".

nightshiftsucks's picture

Yeah I used to say the samething,crash stocks to save bonds but then that would mean deflation.I think taper will soon be reversed and then expanded.

El Vaquero's picture

Time will tell, but I don't see any other options except for PRINT MOAR.  I am also of the opinion that even taking those steps, PRINT MOAR may happen anyway once the shadow banking system locks up if bail-ins unable to cover the losses.  They're betwixt a rock and a hard place, and we're going to pay the price. 

ebworthen's picture

Flight to safety.

NOTaREALmerican's picture

has been annulled.  Thank you for flying Kamakazi Airlines. 

Bill of Rights's picture
Moapa Valley Town Board Meeting regarding Cliven Bundy

Sam Spade's picture

Lacy Hunt has pointed out that for the past 15 years (last year being an anomaly) bond yields tend to peak early in the year when economic optimism flourishes, then drop later in the year when economic reality hits everyone in the face.  I've been making this trade for the past several years.  I love the 30-year at the moment, and think yields are headed back below 3%.