Scorching Demand For 10 Year Paper: Indirects Take Down Near Record 71%, Bid To Cover Surges
If anyone had expected that today's record AB InBev deal would lead to a tail in the just concluded $21 billion 10-Year (technically 9 Year-10 month CUSIP M56 reopening) auction, they would be very disappointed, when moments ago the US Treasury announced a high yield of 2.09%, stopping a whopping 1.5 bps through the When Issued 2.105%, and the lowest yield since October's 2.07%.
The Bid to Cover of 2.77 also rebounded solidly from both last month's 2.64 and the TTM average of 2.63, and was in fact the highest since December 2014.
But the real shocker was in the internals, where the Directs took down at modest 11.3%, but it was the foreign central bankers, aka the Indirects, who took down a whopping 71%, the second highest on record, and just 0.3% shy of the record high hit in February 2011.This left just 17.7% to Dealers, the second lowest on record.
This answers our question what will happen to the Treasury complex once all rate locks from today's mega AB InBev deal are finished. Here it is visually as seen in the reaction of the 10Y after leadning just how strong the auction was contrary to some expectations.
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Bloomberg's next headline:
"Treasuries Soar in Vote of Confidence in US Economy"
Cleanest shirt in the laundry.The laundry on RMS Titanic.
Buy up those bonds! In ten years that government paper is going to be priceless!
The real SHTF sign is the all time high Gold Oil Ratio now at 34.60 barrels of oil per once of gold, it just broke the high from 1973 at 33.63..... so watch out!
http://www.macrotrends.net/1380/gold-to-oil-ratio-historical-chart
China to the rescue!
Hold on until the ten year goes under 1%, which will happen this year if the fed continues to raise. It may happen this year regardless of the fed's actions.
my guys say 1.35%, with an outside chance of hitting 1.15% this year, IF Fed raises ST rates like they've said publically.
The 2 - 10yr spread settled at 1.17% yesterday. It is not unreasonable (nor uncommon) to see the spread flatten to zero or even go inverted if Sh*T Really Hits the Fan.
Long SPXU and TLT!
NoVa
Umm ya
http://www.bloomberg.com/news/articles/2016-01-10/china-retreat-from-u-s...
I wonder who [caugh*caugh*] those indirect bidding central banks are/were? lol
Belgium, Luxembourg, Ireland, Cayman, Switzerland. And the ESF bringing up the rear...
I've said for years, this is all about the Fed and their proxies controling the bond market to neutralize the bond vigilantes and this just reinforces it. Does anyone really think the Fed and their proxies do not have defacto control over 51% of the bond market now? It's how they think the ponzi is perpetual because they control the bond market, plus have the printing press. This is just a shell game to them. China dumps treasuries the last year, so someone else has to pick up the slack or else they risk losing control. Can't have another Greece or Cyprus can we. The rise in interest rates is just the incentive to convince the EU with their negative rates to buy buy buy. This fraud is so pervasive and entrenched that it is going to take something massively unexpected to blow it all up. What that could be I don't know. But I could see TPTB unleashing unholy hell if Trump or Cruz wins the Prez and deliberately imploding the entire world just to punish the voters to make sure they never elect an oustider ever again.
Apparently in trumps speech last night he endorsed ethanol subsidies.
So business as usual, I'm just gonna vote for myself, or whoever the libertarian party fields, don't even care at this point.
Ethanol is a loose loose; Trump is a distraction to the "Presidential Reality Show" - if he is selected, then you know he is a sell out.
Presidents are selected, not elected..the fact that Hillary is even in the race rather than the gallows should be enough to convince everyone, but sadly people keep the hope we have a Republic despite all evidences to the contrary.
Seems Central Banks are saying one thing but voting with their wallets in another...this one is going to be bad folks...
Damn with all these high interest rates...
The Keynesian
Simple Heuristic of Investment Transfer:
1. Each Central Bank in the hot tub creates money (Dollars, Yens, Euros, Pounds) out of thin air.
2. Each Central Bank in the hot tub buys (monitizes) their own soveriegn's debt and other CB's sovereign debt.
3. Each Central Bank in the hot tub has a balance sheet that expands in mysterious ways, whatever it takes.
4. Interest rates in each of the Central Banks in the hot tub sit at or float near zero, or go negative.
5. Rinse and repeat until the fucking economy respond according to the theory.
Meanwhile, the fucking economy does not respond, and then...
I'd say that was a pretty good analysis... Well done.
...and then we stick a 440 volt electrical cable in the hot tub while the party rocks...Draghi, Yellen, Carney and Kuroda engage in a buttfuck train...and then...
"Flip the switch Maynard."
A 440V drop...? Ouch...
I have anger issues.
I sincerely hope that 440volts is wired neutral return.
Just to be absolutely sure.
Amps son amps not voltage.
Insurrexion:
+1
Another favorite is
Credit
Recovery
Asset
Partners
http://macro-man.blogspot.com/2015/12/the-case-of-missing-record.html
well if you are a Euro bank with a access to the Feds 1/2 point RRPO discount window funds you can double dip buying US bonds into a strengthening dollar. i suppose you can reinvest RRPO money, though we are only talking about 1/2 billion or so currently, the fed could step up the RRPO. this small amount of leverage will drive a much larger bond market into negative yields, or certainly negative returns for US bond buyers, or non bank bond buyers. maybe CD rates will pop up, things wont turn until energy turns, and that could be a sudden reversal. the house of saud will fall, and they have been pumping oil at an insane rate.
Your opinion; is this market a repeat of August, lower stocks to get Treasury buyers, then after the Treasury sale, then the PPT plays "levitation"?
Belgium...is that u again....
This is created by starvation for yield it's like being the only food source and that allows you to use real human crap as food filler and still sell it out like hotcakes.
It's the Japan model.
If you are a debt merchant it's how you farm the peasant class.
Get em hooked and then they'll come running for more no matter how much you cut the stuff.
FABULOUS investment day !!!
My portfolio of US treasuries, select munis, and FDIC insured brokerage CDs is soaring in market value - PLUS I am earning interest income every day.
Compare to money rotting in shiny shit with zero income.
Zim dollars were giving great returns as well....
Until they didn't.
Squid
You will die of old age with the USD still going as global reserve currency, in spite of the abuses of the USA regime, in spite of your shiny-shit cult prophesies, fantasies and self-delusions.