The Bill bust up may be causing ripples and major headaches for short-term funding liquidity, and as of today for repos and money markets, but for now at least, the tranquility on any point in the curve longer than a month is untouched. Case in point, the just completed 10 Year auction in which the Treasury sold $21 billion in a reopening of the VS6 CUSIP, at a yield that was well through the When Issued 2.666%, pricing at 2.657%, even if this price was hit following a gradual sell off in the 10 Year throughout the day. The Bid To Cover of 2.58 was somewhat concerning as it was well below last month's 2.86 and below the 12 month average of 2.78, bet better than the auctions from August, July and June. The internals were also less than remarkable, with Dealers taking down 40.2%, Indirects ending up with 38.6%, and Directs left with 21.2%, all in line with the TTM average so hardly remarkable. Altogether a quiet auction and one that confirm so far at least, the debt ceiling concerns are solely limited to the 1 Month Bill end of the treasury curve.
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Finally, we will leave the irony of the Treasury continuing to sell debt to investors - now a week before the Treasury runs out of money - at a time when everyone is panicking over the inability of the US to, well, sell debt, to the epistemologists among our readers.