The chart below demonstrates how something is very busted when it comes to bond auctions recently. We have previously discussed the ever increasing proportion of Direct take downs in the short-end. Today, we saw a record explosion in the Direct take down for the longest bond purchasable. Just who are the Direct bidders? Whose orders are they executing? Are these merely a proxy for China or the Fed? What happens when that "mysterious" demand disappears? Nobody knows. Which is why Rick Santelli called this a failed auction.
All this is accompanied by a collapse in the Indirect bid (think foreign buyers) to the lowest levels since November of 2008. China is finally coming through on its Bond boycott promises.