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Blistering Foreign Demand For 10 Year Treasurys, Highest Since 2011
As expected following yesterday's scorching 3 Year bond auction in which Indirect, aka official foreign, demand soared to the highest in 5 years, today the trend of relentless demand from abroad for US yields continued, when the Treasury sold $21 billion in 10 Year paper, which not only priced 1.4 bps though the When Issued 2.014%, hitting the high yield precisely at 2.000%, but saw the highest Indirect Bid, of 59.5%, since December of 2011.
This was offset by a drop in the allotment to Primary Dearlers, at 27.8% (down from 40.8% last month) to the lowest since the 22.3% seen in March 2013, leaving just 12.7% for Directs. Finally, the Bid to Cover was essentially unchanged from last month, at 2.62 (a fraction below the TTM average of 2.70%), even as the yield rose modestly from January's 1.93%.
Judging by the market reaction, stocks are certainly unhappy by the resurgent demand for paper, which so many had "crude oiled" and said treasurys yields have now "for sure" bottomed, forgetting that Central Banks will make sure there is negative net issuance left at all in 2015!
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What a bargain.
Can anyone explain the rationale for this? Even a baffling Keynesian one? If everything is fixed, where is this supposed rotation out of bonds into stocks? If nothing is fixed, why loan money to insolvent governments? It defies both logic and illogic.
because inflation expectations are declining to zero or even outright deflation. The real required rate of return is fairly constant. the nominal rate is swung by the expectations and currency hedging.
Today's 10yr auction just set the support - yields will be going down to where they were 2 to 3 weeks ago.
30yr refund auction is tomorrow - stay tuned.
Yes, now real inflation on the other hand...
Much like what the Soviet Union experienced, I do expect "prices" to be very low for a long time. Whether or not anyone actually has any money or those things will actually be available is something else altogether...
The market always finds direction after a refunding auction.
What exactly is a "refunding auction"?
"Hope for the best; prepare for the worst!"
I might grab some and make these American consumertards work for me for a change. Back to burgerflipping American slaves I got the zeal for yiel.
Zerohedge review of auctions is very limited. How can you not comment that the bid to cover was incredible because this was a $24 billion auction, instead of the usual $21. If it were $21 billion auction, bid to cover would have been close to 3x.
Stocks going down is bullish for stocks, right? Is this a good time to buy AAPL?
/sarc (but even though I'm being sarcastic, my sarcasm will probably be right.... AAPL to 150 by March?)
Good idea. I'm personally waiting for NTFX to correct to its true value of $15/share.
Its Japan, look at the $XJY dropping! Foreign/Exported Fed QE anyone!
"Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore."
"we would never monetize the debt"
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