$29 Billion 7 Year Auction Comes At Record Low Yield And Record High Bid To Cover

And so the Treasury records continue, as does the reach for yield. Today's 7 Year came at the lowest yield in history or 1.89%, while the Bid To Cover surged to an all time high 3.04. And as we have been asserting for months, foreign investors continue to creep ever longer on the curve, with Indirects once again taking down more than half of the auction, or 50.24%. Directs oddly jumped by over 50% from August, taking down 13.38% of the auction, leaving the remaining 36.38% to the primary dealers. And so the divergence continues: those who no longer trade stocks (i.e., humans), are bidding up any fixed income paper they can get, even if it means being stuck for 7 years with a taxable annual yield of under 2%. At the same time the vacuum tubes are buying rental DVDs at a quadruple digit PE multiple. Obviously, this divergence is unsustainable, and the longer it persists, the greater the pain all around when it finally collapses.


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