Unmemorable 7 Year Closes The Week's Trio Of Bond Auctions

Tyler Durden's picture

Unlike the past last auctions in the current week, in which the 2 and 5 year both priced far weaker than expected, and saw a surge in Direct bidders absorb the absence of foreign demand, today's 7 Year auction was largely unmemorable. Granted, it did price with a 1.5 tail, coming in at a high yield of 2.28%, after with the When Issued trading at 2.265% second into the close, indicative of last minute weakness, but the other metrics were largely in line. The Bid To Cover came at 2.63, same as last month's, although well below the LTM average of 2.84%. The internals were stronger with Directs not surging as many has expected, and taking down just 9.26% of the auction, meaning Primary Dealers had to consume 51.2% of the auction. That left foreign bidders recycling their trade surplus to take on about 39.55% of the auction, better than last month's 32.17% but worse than the 12 month average of 43.33%. As noted: rather uneventful and on the weak side. What is more disturbing is that absent a debt ceiling hike, this may well be the last bond auction for a long, long time. And without more auctions, what will Bernanke monetize?