And so the flattening, and the "inexplicable" (Chinese and Japanese) bid for Treasurys continues. After yesterday saw 3 Year paper selling at a better than expected rate, if still at the highest yield since 2011, today it was the turn of 10 year paper to sell briskly, with the high yield of 2.612% once again pricing through the When Issued 2.618%, although in a mirror image of the short end, this was the lowest yield since June of 2013. The bid to cover came at 2.66, modestly below April's 2.76 and on top of the TTM average of 2.63. However, the internals were more curious with Dealers getting just 29.1%, matching their take down from March, and the lowest since March 2013. This meant Indirects were left with 49.3%, well above last month's 44.7%, and above the 43.9% TTM average, highest since the 49.7% in February. Directs were left holding 21.6% of the auction, above the 17.7% average.
All in all, another strong auction as the Treasury curve continues to not comply with either the Fed's or the sellside's demands that it finally sell off to "telegraph" a stronger economy and coming inflation. Thank you unintended consequences of central planning.
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