We had to triple check the Indirect print in today's 30Y auction, because at first it seemed the US Treasury had made a huge mistake, but the number showing that the Indirect take down in today's auction was a whopping 66% - this was the highest take down on record, and may have put an end to any concerns that foreign central banks have no interest in US paper, if only in the primary market (and only for the time being).
Indeed, while some were looking at the repo rate on the 30Y which was solidly positive this morning, and were expecting a poor, tailing yield, not only did this not happen, but the high yield print of 2.98% stopped 0.6 bps through the When Issued. The Bid to Cover likewise was a whopping 2.536, the highest in 2015. Directs and Dealers ended up with 7.4% and 26.6% of the auction, with the Dealer take down the 3rd lowest in history.
But once again it was the Indirect bid that was unprecedented, and begs the question: are EM central banks only unwinding reserves, i.e., selling, that are Off The Run only while purchasing OTR securities in any given auction, in an attempt to shore up liquidity? We expect the answer will be known in a few weeks time.

