Despite Third Consecutive Record Low Yield, Today's 7 Year Auction Prices Surprisingly Weak

Tyler Durden's picture


Concluding this week's series of very weak Treasury auctions is today's $29 billion auction of 7 year paper which despite pricing at a third consecutive record low yield (as more and more are frontrunning the Fed's implicit desire to buy up every US Treasury above 3 years in circulation) was actually merely the third consecutive auction to price with a tail. With the When Issued trading at 1.063%, the final high yield was 1.075%, sending off the first red light. Then the Bid To Cover dropped to the lowest since October at 2.64, which was not good either. Finally, the Primary Dealers once again were stuck holding more than half of the bag, or a take down of 51.48%, which was the highest since January, leaving just 42% to the Indirects and a very low 6.49% to the Direct bidders - the lowest since February 2011, and one can see why many are scratching their heads at the seeming strength of the secondary US bond market and the increasingly weak primary one.

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Thu, 06/28/2012 - 13:28 | 2569825 YesWeKahn
YesWeKahn's picture

People get ready to buy 30Y to dump to the FED right away. FED twists, people anti-twist.

Thu, 06/28/2012 - 13:49 | 2569962 bdc63
bdc63's picture

No thanks.  Homey don't play that game ...

Thu, 06/28/2012 - 14:23 | 2570100 economics9698
economics9698's picture

Bond market collapse move up ahead of schedule with Obamacare.  Get the fuck out of paper.

Thu, 06/28/2012 - 13:29 | 2569828 SHEEPFUKKER

NIRP coming to America. 

Thu, 06/28/2012 - 13:32 | 2569851 LawsofPhysics
LawsofPhysics's picture

Followed by banks runs.  Bring it.

Thu, 06/28/2012 - 13:31 | 2569847 Bastiat
Bastiat's picture

It's whatever they want it to be.  If it looks weak it's just that they didn't bother to make it look strong.

Thu, 06/28/2012 - 14:25 | 2570106 slewie the pi-rat
slewie the pi-rat's picture

and one can see why many are scratching their heads at the seeming strength of the secondary US bond market and the increasingly weak primary one.

perhaps it just slipped what is left of whoever wrote this nonsense's mind that china no longer orders thru the primary market...

or that the "7-year auction" is a bit ambiguous re the FEDs twist1 parameters V. twist2 parameters

propwash paying better than facts recently for the zH "bidness & marketing plan" much? 

Thu, 06/28/2012 - 13:31 | 2569848 evolutionx
evolutionx's picture

CDS on banks explode again


and PiGS rates climbing...

Thu, 06/28/2012 - 15:03 | 2569905 bdc63
bdc63's picture

thanks for posting the link

Thu, 06/28/2012 - 13:32 | 2569855 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The US Treasury's shit don't stink, bitches!

Thu, 06/28/2012 - 13:34 | 2569862 citizen2084
citizen2084's picture

NIRP is here already. Or it should be NEIRP is here.



Thu, 06/28/2012 - 13:43 | 2569865 bdc63
bdc63's picture

wow ... what could possibly be happening ... that's an enigma inside a conundrum all wrapped up in a burrito ...

Thu, 06/28/2012 - 13:34 | 2569867 milanitaly
milanitaly's picture

Tonight it's only a simple match


Thu, 06/28/2012 - 13:35 | 2569872 billwilson
billwilson's picture

Without new QE there is no new cash coming into the system to buy the new bonds. Hard to see how the Fed can finance the huge deficts without more helicopter money soon.

Thu, 06/28/2012 - 13:36 | 2569876 kellirose
kellirose's picture

Do the direct dealers have a repo agreement with the FED for them to repurchase the bought bonds at auction? What a cluster ---- ... how long can this continue?

Thu, 06/28/2012 - 13:50 | 2569968 Madcow
Madcow's picture

"weak" - simply becuase there is less and less net new cash being created that can be invested in anything. 

that's the problem with fractional reserve banking and fiat "debt = money" etc - 

what you get is:  growth -> growth -> growth -> growth -> growth -> growth -> total collpase.  again and again and again.

we're just now in the second inning of the "total collapse" phase. 

if you're not dependent upon "income," have no debt, and you've already saved a few million $ cash USD - you're going to be fine. 





Thu, 06/28/2012 - 14:09 | 2570047 bdc63
bdc63's picture

The only thing that would ever get me to buy a US Treasury would be a gun to my head ... and yes, I do know that there is a possibility that could happen someday ...

Thu, 06/28/2012 - 13:58 | 2569997 Village Smithy
Village Smithy's picture

The gig is up. TPTB know now that the time for picking up pennies in front of the steam roller has ended. No need to guess what asset class will hold up best they are waiting for the crash now and all the treasure will be available at blood in the street prices. 

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