Scorching Demand For 30 Year Paper Means Lowest Dealer Award On Record, Soaring Bid To Cover

Tyler Durden's picture

Where does one begin with the plaudits for the just completed 30 Year auction. Following this week's weak, tailing 3 and 10 Year auctions, there was concern the 30 Year would be a disaster. It was everything but: pricing at 3.444% (virtually unchanged from the 3.44% last month), the final demand stopped through the When Issued of 3.467% by some 2.3 bps - the largest in recent history.

And speaking of recent history, the Bid to Cover soared from 2.09 in May to 2.69 today, the highest since February 2013. And then there were the internals: Indirect bidders just couldn't get enough, with the allotment to Indirect bidders exploded to 51.8%, the highest since February 2006 and second highest ever, and since Directs took down an aggressive 21.8%, this means that Dealers we left with a tiny 26.5%: the lowest Primary Dealer allottment in history.

Immediate result of today's auction: buying across the curve, with the 30Y now at a lower yield on the week, and the benchmark 10Y is once again set to dip below 2.60%. So much for a) the selling in bonds and b) the recovery, of course.