Concluding this week's series of very weak Treasury auctions is today's $29 billion [4] auction of 7 year paper [4]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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