There was some doubt, when the 3 Year auction priced at 0.992% or the highest since May 2011, if the August auction would finally see 3Y paper pricing wide of 1%. It did not: in fact, with a When Issue of 0.93%, the auction priced through moments ago, at a high yield of 0.924%, surprisingly the lowest level since April. The internals were somewhat more exciting, with the Bid to Cover dropping to just 3.04, the lowest coverage since June of 2013, which as the only BTC with a 2-handle going back all the way to 2010. As for the takedown, Indirects were largely unchanged at 36.2%, just below the 38.2% last month, offset by a jump in Directs from 12.7% to 19.0%, both in line with average, which meant that Dealers were left holding just 44.8% of the final allocation, the lowest since February.
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In other words, if anyone was hoping that the bond market would give a firmer opinion on where shorter-term rates are going in the next 3 years, please hold your breath until next month.
