If yesterday's slightly tailing 10 Year auction was a non-event, today's $16 billion 30 Year refunding was one of the uglier long-end auctions in a while, which perhaps is to be expected in a world in which the Fed is, for the time being, no longer monetizing Treasurys and Dealers no longer have the option to turn around and flip the paper back to the Fed on a whim, and with guaranteed profit.
The highlights: printing at a high yield of 3.092%, this was a notable 1.7 bps tail to the 3.075 When Issued, and certainly wider than last month's 3.074% yield. Keep in mind yesterday's 10 Year priced inside of the October 10Y auction.
The Bid to Cover was also nothing to write home about, and at 2.292 it was the lowest since May's 2.09%, as well as below the TTM average 2.44%.
The internals showed that Direct interest tumbled to only 13.8%, the lowest since July, and with Indirects also taking the least since May, it meant Dealers were stuck holding 42.5% of the auction or the most since May's 51.2%.
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So is it time to start whispering QE yet? Or is it only stock market weakness that brings Bullard out of hibernation, because somehow, the Fed believes that with a freefall in the US rates market stocks can still continiue to keep going higher?
