Poor 30 Year Auction Accelerates Bond Market Selloff

Tyler Durden's picture

After yesterday's ugly 3 and 10Y auctions, of which the latter is still trading at a record "fails" charge in repo, there were few hopes for today's 30Y auction, especially in light of the dramatic blow out in yields profiled moments ago. Well, it's a good thing expectations were low because the just concluded reopening of $12 billion in 29Y 11 Month paper was the latest bond debacle, with the paper tailing the When Issued by 1 bps, printing at 2.475% compared to the 2.465% When Issued.

The internals were even worse: the Bid to Cover to 2.129, down from 2.24 in August, the lowest since February and far below the 6mma average of 2.35. Indirect interest dipped from 61.5% to 57.9%, below the 63.9% average, leaving 37.5% to Dealers, the highest since last August, while Directs ran away, as they did in yesterday's auctions, taking down just 4.6% of the paper. This was the lowest Direct Bid since 2009.

Finally, with the auction weak because of the market, the market dropped even more because of the auction, and as Bloomberg reported moments ago:

  • TREASURIES EXTEND DROP AFTER 30Y AUCTION TAILS

Confused by what is going on? Don't worry, so is the BOJ which is responsible for all this chaos, and bonds will likely continue to slide until the Sept 21 BOJ announcement at which point either more easing will be required or the VaR whock will result in a supernova of P&L losses for anyone who still holds bonds.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Quantum Bunk's picture

As I said 2 months ago. When the capital flight gets underway, these will be 1000 comment threads here on Zerohedge.

thesonandheir's picture

It's not panicking if you're first out the door.

wisehiney's picture

If you are desperate to get rid of your tbonds, I will be helping you out from now on.

No, Thank YOU!

SoDamnMad's picture

Capital flight to where? Under the mattress.

yogibear's picture

The Fed will always back door buy.

Consuelo's picture

 

 

"...or the VaR whock will result in a supernova of P&L losses for anyone who still holds bonds."

 


Cool - as long as it's the champagne variety...

buzzsaw99's picture

this too shall pass.

HalinCA's picture

Soo ... the yield curve returnth?  A bit too soon for the Obamanites ...

user2011's picture

China and Russia are not buying.others can't afford buying.

user2011's picture

China and Russia are not buying.others can't afford buying.