Whether it was out of spite, or for whatever reason, it seems that whoever did not get their requested allocation in today's Verizone deal decided to dump all that cash in today's just concluded $21 billion 10 Year TSY Reopening [3], which was the first reduction in nominal size since the Treasury announced the gradual tapering of bond issuance (to precede the actual Tapering by the Fed), down from last month's $24 billion [4]. Pricing at 2.946%, this was the highest yield since June 2011, however it was nearly 3 bps through the 2.975% When Issued, indicating a surge in demand for paper, and confirmed by the Bid To Cover of 2.86: the highest since March 2013's 3.19, but above the last 12 month average of 2.78. Curiously, Directs which latest have been fleeing from the long end, could not get enough of today's Reopening, taking down a whopping 29.%, double last month's 15.2%. Indirects took home 36.6% of the bond, while Dealers were left with just 33.8%, the lowest since April. Overall, any concern that primary demand may be disappearing with the Fed set to announce a reduction in QE a week from today, those fears were blown away, of only for this month.
[5]