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.

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nuclearsquid's picture

hahah flight to safety!  LMFAO

viahj's picture

"War, what is it good for?"  now we know

LawsofPhysics's picture

Thank god for lemmings and their "flight to safety" was starting to worry about getting out of a position...

Do as central banks do (primary dealers found suckers to buy their shit), not as they say...

nuclearsquid's picture

Perhaps we have just been served Iraqi black swan kebabs with (Obama's special) yogurt sauce.


jubber's picture

Belgium buying the shit out of it I guess?

Crash N. Burn's picture

"Belgium buying the shit out of it I guess?"


  Why not when it's free money:

"..Paul Craig Roberts (along with Dave Kranzler) their original piece, the simple numbers involved make it clear we are dealing with a pathetically transparent money-laundering operation:

From November 2013 through January 2014, Belgium with a GDP of $480 billion [supposedly] purchased $141.2 billion of U.S. Treasury bonds. Somehow Belgium came up with enough money to allocate during a three-month period 29 percent of its annual GDP to the purchase of U.S. Treasury bonds.

As Roberts also notes; Belgium is another one of the West’s Deadbeat Debtors, with a (large) national debt, a budget deficit, a trade deficit, and a current account deficit. It didn’t have any money to allocate to the purchase of U.S. debt – let along forking-over 29% of its GDP in a mere three-month period. The supposed “purchase” is not only (economically) impossible for this debtor-government, there could be no possible legitimate purpose for such a (relatively) massive accumulation of any foreign debt.

It is a prima facie fraud, and thus (inevitably) a money-laundering operation. “Somebody” gave the Belgian government the currency to fund this sham-transaction."


Belgium: Money-Laundering Toilet For Unwanted Treasuries

'Course, they'll never be allowed to redeem shit.

NotApplicable's picture

Wait a minute!!! Why is anyone spinning yarns about the Belgian government buying the bonds when everyone knows it's Euroclear?

*looks at linked article*

Well, if this isn't fucking disinfo at it's finest. Beginning of the article pins shit on the government, but the end pins it on Euroclear and the ECB.

I am SOOOOOOO sick of this shit. Only question is, bait-click whore, or intelligence asset?

Babaloo's picture

Euroclear is not a buyer, they're just a clearing house.  "Pinning" it on Euroclear is like saying stocks are going up because the NYSE is buying stocks.  It doesn't work that way.

101 years and counting's picture

during a depression that is finally about to kill the Fed, a 3.44% yield isnt too shabby.

Spungo's picture

People are only buying long term bonds because they think some other person will buy them at a later time. That's the definition of greater fool theory, aka ponzi economics. No sane person would lend money to the government for 30 years at such a low interest rate. Even 10 years seems too long given the current economic conditions.

GooseShtepping Moron's picture

I take your point, but the Greater Fool Theory does not take financial repression into account. When gargantuan insurance companies and pension funds are required to own these bonds, the purchase thereof loses the character of a voluntary transaction and the entire market for risk is distorted.

The life of a bond trader ought to be a pretty calm affair. In a stable monetary regime you would expect there to be a pretty steady equilibrium bewteen yields, par values, and prices, such that the primary function of a bond trader would be to arrange transactions between large institutional clients who wanted to adjust their risk profiles. Of course, with a collapsing economy, wildly chaotic monetary policy, and an out of control government, none of this works any longer. The mandatory purchase of bonds is simply racketeering; large institutions pay protection money to the government so that they will be allowed to do business otherwise unmolested.

pound the vix's picture

Al-Qaeda buying Treasuries with their newly aquired cash on the sidelines.

Flakmeister's picture

Those bond shorts must be feeling like the new pretty boy in the Turkish prison...

The dollar will die, but likely not until all other fiats pave the way....

Yen Cross's picture

  The 10year dropping like a rock as well.

      U.S. 10-Year    2.595    -0.045    -1.70%

WMM II's picture

if one were to assign meaning to the world financial markets, it would seem that the big dogs are bracing for the unavoidable deflation from the artificial asset bubble 'wealth' creation that becomes obvious to everyone else after the fed QEuits the pumping. having forced the impression that stocks are worth something, when the curtains draw back, those owning stocks will realize that the # of shares x the 'price' on the tv sreen only matters if you have sold. and if more than a couple of them sell, much for the price on the tv screen for the next guy.




sbenard's picture

Aren't bubbles beautiful? Who needs an economy? We have PRINTED prosperity now!

goldbear's picture

at the end of the day, there is always a buyer of US Treasuries. it is not a bubble. it is where the govt wants it to be. they set the interest rate and the market for the bonds.