Today's $32 billion 3 Year auction closed at a 1.298% high yield: a slight decline from last month's 1.349%, which coupled with the pick up in the Bid To Cover from 3.013 to 3.219, explains why the auction prices inside of the WI at around 1.305%. Overall, Primary Dealers and Directs once again were responsible for two thirds of the auction, with just 34.4% going to Indirects, which nonetheless was an improvement from February's 27.6% which was the lowest since 2006. It seems foreigners are willing to purchase a little more bonds than recently, although this was still well off the LTM average of 34.4%. Following in the model of last month's 7 Year auction, we expect Primary Dealers to flip at least 50% of today's take down within 3 weeks back to Fed, as the check kiting game continues with absolutely no supervision from the Fed (which explains the low hit rate of 22.9% for the PD bid).
$32 Billion 3 Year Auctions Prices At 1.298%, Indirect Interest Picks Up Modestly
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