The just concluded 30-Year bond reopening of Cusip RP5, in which the US Treasury sold another $13 billion in long-dated paper in this year's final auction of 30 Years, was almost a carbon copy of yesterday's 10 Year auction.
While the high yield of 2.978% posted a modest decline from last month's 3.07%, it did tail the When Issued fractionally, which was a 2.975% at 1 pm, in a rerun of yesterday's auction. And just like yesterday, The Bid to Cover posted a modest increase, rising from 2.409% to 2.422%. But the biggest comparison is that Indirect Bidders also surged once again, taking down 63.9% of the final allotment, and with the exception of September's 66%, would have been a record high. And while Directs kept their share of just over 10%, the same as last month, this mean that the Dealer takedown of 25.7% was the lowest on record.
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Perhaps the only different from yesterday's 10 Year, is that while the benchmark maturity was trading negative in repo yesterday and still is today, the 30Y was positive on both days, suggesting there was less of a short squeeze heading into the auction. Which can only mean that foreign central banks were once again the dominant marginal price setters, which naturally is to be expected in a world in which trillions in government debt yield negative nominal rates, and where whispers that a Fed rate hike could lead to policy error and massive curve inversion, mean that buying the long end could be just the right trade ahead of the Fed being forced to unwind its tightening efforts and proceed to go NIRP or launch QE4.
