While not quite as brisk as last month's 3 Year auction, today's just concluded sale of $24 billion in 3 Year paper was very solid for one more month, with the High Yield pricing at 1.05%, an impressive 1.1 bps through the When Issued, even as the yield jumped from January's 0.926%.
The Bid to Cover, perhaps reflecting the extra pick of 12 bps in yield, rose ever so little, increasing from 3.330 to 3.345.
But it was the internals where as usual the action was, with the recent trend of collapsing Direct demand not disappointing, and in January only 7.2% of the final takedown when to Directs: the lowest since April 2012. The offset: a surge in the Indirects [5], typically foreign central banks, which ended up with 48.9% of the paper - the most since May of 2010!
We will leave the question as to just which NIRPing, foreign monetary institution was rushing to grab the "unheard" of yield of 1% for 3 Years (and 1% cash coupon) and arb the difference to local rates, open. The answer: most likely all of them.
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