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Last 2 Year Auction Of QE3 Prices At Lowest Yield Since May, Lowest Bid-To-Cover Since September 2013
After last month's 2 Year auction, which priced at the highest yield since 2011, but a matching jump in the Bid to Cover, which at 3.564 was the highest since February, today's just completed issuance of $29 billion in non-POMOable 2 Year paper showed a big drop in yield, sliding to 0.425%, stopping through the 0.429% When Issued. Offsetting the drop in yield, however, was the Bid To Cover, which dropped to just 3.113, the lowest since September 2013, thus making any firm determination of interest complicated. Furthermore, while the Directs took 47.16%, or above the 42.98% in the prior month, this was below the TTM average of 49% and the second lowest since March. Is the lack of the free POMO flip put going to force the Dealer bid lower? We dont need to know the answer for now as Directs picked up 16.19%, or the most since June, while Indirects were left holding 36.6%, well above the 29.2% TTM Average.
Altogether, an unremarkable auction in a week where the longer-maturities will be far more closely watched, especially after tomorrow once the FOMC announcement is in the history books.
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Forward guidance at work.
Japan with the Fed buying stocks.
After the election the US hits $18 trillion on the deficit.
$17.89 trillion. Obama's holding back expenditures until after the election.
http://www.usdebtclock.org/
really enjoying the slow grind upward in the Fraud markets in anticipation of the Fed doublespeak release...
fucking dumb.
It seems to be a given that QE ends tomorrow. That being the case, however, how are they going to keep the markets pumped up until the election?
The price of the thirty year bond, in the close in months, remains in a tight range basically at the now triple top for this instrument; which is not bullish; a triple top in a market like bonds is never bullish. the price is the inverse of the yield. These things might surprise the conventional wisdom by not getting bid up any higher; ever. the long term chart just shows this multiple top; a price where buyers just say no; and that's a kind of a topping formation; it's been in process for over a year now. I think, flight to quality, or no flight to quality, it's at least a fifty fifty bet that nobody ever bids up the price of these long bonds any higher. Although several experts say the rally will continue into late next year; but they're wrong at least as often as their right.
It's important to remember that people still need this shit for all the wrong reasons. This is one of the biggest distortions in the marketplace caused by the Fed. The lack of any meaningful yield, and the fact that a lot of heavy hitters are nervous in the service causes them to buy this paper; cause at least they'll get their "money" back. See my previous explanation as to why these are higher quality than bank deposits. Because there's no bank to fail. And they're higher quality than business paper, because there's not business to fail; well, except for the Federal Government itself, but that is "expected" to take awhile.