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Scorching 30 Year Auction Sees Surge Of Indirect, Direct Bidders; Dealer Take Down Lowest On Record
Once again, following a strong 10 Year auction, today's 30 Year reopening of CUSIP RJ9 was an absolute stunner, and with the When Issued trading at 2.875%, the high yield was a very much scorching 2.848%, stopping through nearly 3 bps through the WI, and the lowest 30 Year auction yield since November 2012. The reason for this impressive surge in last minute interest: a record low takedown by Dealers who got just 25.9% of the auction as they were pushed out by the other two bidding groups. Sure enough, there was an absolute scramble by Indirects (49.8%) and Directs (24.3%) both of which received, logically, a record high takedown for a 30 Year. And finally with the Bid to Cover soaring to 2.762, this was the highest since January of 2013.
Overall, while stocks continue to do their thing, tracking every move in the USDJPY, the smart money continues to rush into deflation protection, and buy every piece of "high quality collateral" they can get their hands on. Thanks GPIF.
And 30Y is rallying off the back of this...
And something curious: as Nanex pointsout, the liquidity during the auction (at 1:00PM Eastern) just hit an all time low.
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If I could I would put every dime into the 30y. It is a one way trip to sub 2% from here.
yea, sure. as if the present form of government will even be here in 30 years, or even able to honor their debts if they are.
Who said he would hold to maturity?
somebody eventually has to. talk about diminishing returns.
Would any of you ZH bond folks mind fielding a question/sharing an opinion?
What would y'all say about using Treasury Direct as a way to keep deposits out of the banking system? I was going to look into getting some paper bonds and stuff them in a safe deposit box, but it looks like paper bonds are phased out. I don't have a lot of money, so it probably isn't that big a deal, but I was curious what I might not know or have overlooked.
Regards,
Cooter
I use Treasury Direct. Short term bills only. No bank failures, no 'bail in worries, no bank holiday, no FDIC insurance limits, etc.
If you MUST have a store of FRNs handy - and I do since I have businesses with voracious cash appetites, it is a great way to go....
"If you MUST have a store of FRNs handy"
That pretty much describes my goal. I know the whole "make a return" thing sounds great, but I have lived through two of these blow outs and I don't see how a 3rd can't be around the corner. I just want to park my cash somewhere so eventually I can decide what to do with it.
Regards,
Cooter
it is an effecient (price and accessability) system. Good tool to suit specific needs.
If Zombies start walking, then differrent story.
NoVa
Atsome point this rush to the bottom is a self sustaining move.
bullshit.
"Uk trade helped by sales of silver to India, official statistics show, while imports fall by nearly £700m. Tumbling oil prices and strong demand for silver helped Britain's trade deficit narrow to its lowest level in seven months in October. Exports edged up to £24.3bn in October, helped by sales of silver to India, while imports fell by nearly £700m, according to the Office for National Statistics (ONS)."
http://www.telegraph.co.uk/finance/economics/11284508/Silver-exports-hel...
and Silver at $17 is real????
i think not.
Crude oil no likey.
And by 'high quality' they mean entities that have run deficits every year and have lost control they need to start printing money to buy the issuance.
soooooo buy buy buy
true ... but in "theory" they can raise taxes to close the deficit
or just bomb the sh!t out of biggest foreign holders of US debt ...
Not sure i agree that 30yr is going to touch 200 bps, but a rally is on; we could realistically see 250 on 30yr . the 10yr will be sub 2% very soon.
Treasuries action reveals degree of fear in markets. Today and yesterday's auctions just established new base resistence upon which to rally.
Within next 3 months, Gonna be a good time to refinance your home loan, if you have one.
NoVa
10yr yield @ 1%
30yr yield < 2%
deflation on tap
(oncoming recession a tad helpful ...)
banksters ain't gonna like the flat yield curve ... but it will be the lest of their worries
I agree on the deflation theory. I just don't know 1) if current circumstances will stay in this relevant range to reset required rate of return expectations and (2 the speed as to the consensus outlook will reset.
As deflation continues to be more & more real, treasury buyers will continue to buy down the yields. The snap out of current circusmtances could be as easy as the Saudis saying they'll cut production - bang - oil is back up 20 bucks.
Mongo don't know - only pawn in game of life -
NoVa
Fear index? Running to the percieved safety of government debt...
And for that, I thank you.