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Poor, Tailing 5 Year Auction Drags Down Treasury Complex
With just about one hour until the FOMC statement, and the market in a general state of panicked, if bullish, disarray which had seen a material selloff in the Treasury complex, nobody was expecting a strong sale of $35 billion in 5-Year paper which just concluded moments ago. However, nobody expected it to fare this poorly either.
With the When Issued trading at 1.40% moments before the announcement, traders were left almost speechless when the 5Y priced at 1.415%, tailing by a whopping 1.5 bps, which may be the worst tail for this maturity bucket in years.
The internal were just as ugly: with the Bid to Cover sliding from last month's 2.57 to a weak 2.43, it was the plunge in Direct orders, which took down just 3.8% of the final auction, the lowest since June 2013, coupled with the drop in Indirects left holding 58.9% of the auction, the forced Dealers to end up with 37.2% of the auction, a 4.44x hit rate after tendering $57.8 billion in bids.
Confirming the ugly auction was the reverberation across the bond market which showed a substantial jump in yields not only at the 5Y mark, but across the entire curve.
And now all eyes on Yellen because if the Fed Chairwoman is even a fraction hawkish (which would be far more than most expect), all losses will be promptly made up following the selloff in equities should December still remain in play.
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Scorching 2.5 basis point back-up! Head for the hills.
Correction: less than 2.5 bps...need new glasses.
keep your eyes on the road rather than looking to the december horizon ZH. with minutes till fomc release, a 10 bps rise in the fed rate could be announced.
imma wishing and hoping Janet,and the boys are tired of this "game" also,and does the surprise lift-off,just to move this collapse along quicker. war talk just ain't doing it
yeah, i'm delusional,but a boy can still hope.
Everybody's waiting for that attractive negative yield to invest in.
And in other news, don't forget the power and influence of the two corporate welfare babies: GE and Boeing.
The House of Representatives passed (in an unusual way) a bill to reathorize the Export/Import Bank.
Shocked, I tell ya - shocked!
I need Yield !
Sail has been set right for the iceburg.