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Ugly, Tailing 7 Year Auction Prices At Lowest Bid To Cover Since May 2009

Tyler Durden's picture




 

If yesterday's 5 Year auction was ugly across the board, today's 7 Year was even uglier.

The ugliness started at the very top, where the High Yield came at 1.792%, tailing 1.1 bps to the 1.781% When Issued. But the Bid to Cover really stole the thunder, sliding from 2.368 in February to just 2.317. This was the lowest coverage since May of 2009. The internals were not as exciting, with Directs holding 12.3% (below the TTM average of 16.5%), Indirects left with 50.51% (above the 48.2% average), and Dealers virtually unchanged from a month ago at 37.2%.

The auction was so weak it has accelerated the selling across the curve, and the 10Y, after sliding to the low 1.80%s earlier this morning, is about to rise above 2.00% yet again.

 

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Thu, 03/26/2015 - 13:16 | 5930071 Chuck Knoblauch
Chuck Knoblauch's picture

Not enough QE being pumped to purchase Treasury debt?

Thu, 03/26/2015 - 13:21 | 5930087 madbraz
madbraz's picture

who would want 1.79% when you can get 0.96% for a seven year italian bond...or who would want 2.58% on our 30 year bond when you can get 0.62% on a german 30 year (2% more for 30 years!).

Thu, 03/26/2015 - 13:23 | 5930096 maskone909
maskone909's picture

is it me, or is it more ugly when people actually buy these things?

Thu, 03/26/2015 - 13:23 | 5930099 LawsofPhysics
LawsofPhysics's picture

What is "ugly" when the (eventual) owner of all this debt is a single entity?

Thu, 03/26/2015 - 13:42 | 5930189 KnuckleDragger-X
KnuckleDragger-X's picture

Not a single entity but a club and you still ain't invited but you will be paying for it......

Thu, 03/26/2015 - 13:47 | 5930224 LawsofPhysics
LawsofPhysics's picture

I wish those club members well, especially once all the faith is lost in the only thing that they really control...  their fiat...  "freedom" is just another word for nothing left to lose..."

tick tock mothfuckers...

Thu, 03/26/2015 - 13:24 | 5930103 Bam_Man
Bam_Man's picture

Who the hell wants 7-year Treasuries that pay you 1.78% (in "strong" US Dollars) when you can pay the German government -.07% to hold your depreciating ("weak") Euros for 7 years?

/sarc

Thu, 03/26/2015 - 13:34 | 5930155 upWising
upWising's picture

Folks at all levels are starting to smell something funny.

I believe what might be happening is that the Bonds, which folks believe are bullet-proof-plastic-poop bags to hold "who knows what", are found NOT to be bullet-proof-poop-bags, but rather to be "enhanced perferrated poop bags with breathing holes throughout." 

It's only a matter of time until people smelling something look down and see what's oooozing through the poop bag.

 

THAT'S when the Fæces Hit The Whirling Blades.

Thu, 03/26/2015 - 13:38 | 5930175 LawsofPhysics
LawsofPhysics's picture

Way past that now...  I don't know many people holding that "bag"...

This is/will become a global lost of faith in all fiat...


Thu, 03/26/2015 - 13:46 | 5930209 KnuckleDragger-X
KnuckleDragger-X's picture

I read an article last night about the retail investors staying out of the market, especially with all these "great deals" since Wall St. only has our best interests at heart.....

Thu, 03/26/2015 - 13:46 | 5930210 Chuck Knoblauch
Chuck Knoblauch's picture

Earn 16% on a Russian CD.

Park your cash into a Russian bank.

Thu, 03/26/2015 - 14:24 | 5930375 polo007
polo007's picture

http://ca.reuters.com/article/businessNews/idCAKBN0MM2JG20150326?sp=true

NEW YORK (Reuters) - The New York Federal Reserve officials tasked with prying interest rates off the floor have been meeting with bankers and traders to plot how best to do it, amid deep uncertainty over how much control they will really have over short-term lending markets.

With the U.S. central bank expected to raise rates later this year, Simon Potter and his team of market technicians have the tricky job of implementing higher rates using some new and lightly tested tools as well as some that may not work as well as in the past. They'll be operating under intense global scrutiny that's centered on the prospects for the world’s biggest economy.

Even while testing new methods meant to sweep up trillions of dollars of reserves from financial markets, Potter's team is preparing for volatility and to make on-the-fly adjustments when the time comes, according to interviews with Fed officials and market participants.

The trouble is that the federal funds market, the intra-bank trading pool traditionally used by the Fed to meet its policy goals, has shrunk to about a quarter of its pre-crisis size after more than six years of unprecedented monetary stimulus.

"There is a lot more uncertainty in the mechanical features of the outlook than people admit to," said Joseph Abate, a money-market strategist at Barclays Capital.

The Fed wants to avoid a scenario in which yields don't rise enough after it lifts the fed funds rate because banks, flush with $2.5 trillion of reserves parked at the central bank, don't need short-term funding.

The central bank also risks being drawn so deeply into money markets that it destabilizes things.

That's why the New York Fed, already under political pressure due to regulatory missteps, is taking every precaution it can to protect its credibility and that of the central bank. It wants to make sure that when the central bank decrees higher rates, yields will actually rise.

To combat anxieties on Wall Street and in Washington, Potter and his deputies have been hosting regular lunches with market participants to ask and field questions about what sort of market tinkering will might be needed or avoided to get it right, and how banks and funds will react.

He's has also met with officials at the European Central Bank and other global counterparts to outline the U.S. plan to tighten when most of them are easing.

Thu, 03/26/2015 - 19:12 | 5931665 Stormtrooper
Stormtrooper's picture

I'm getting soooo tired of all the long winded discussion about how the Fed is going to move to the next phase of centrally controlling the economy so that the banks can start making a killing again.

According to the MSM, we have a screaming economy and anyone who is not a deadbeat and wants a job has one and is moving up the ladder of the American dream.  Time to shit or get off the pot.  April 1, raise 10 year rates to 10% and let's prove what a great and powerful Oz  this country is to the rest of the world.

 

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