Stellar 3Y Auction: Highest Bid To Cover Since Sept 2015, Foreign Demand Surges

Unlike last month's ugly 3Y auction, today's just concluded sale of $24 billion in 3 year paper was stellar, stopping through the When Issued 1.934% by 0.2bps, a surge in buyside demand as the Bid to Cover jumped from 2.76 to 3.15, the highest since September 2015, while Indirect Bidders took down the most since August.

The details: the high yield was 1.932% vs six previous auction average 1.572%, it stopped through the WI of 1.394%.

The Bid-to- cover was 3.15, up from 2.76 in October, and well above the previous six auction average of 2.88.

Dealers were awarded 33.6%, slightly below the six previous auction average 35.2%, and down from 37.5% last month, while Direct bidders took down 7.4%, below last month's 9.0%, and down from the six previous auction average 8.8%.  Finally, foreign central banks and reserve managers, i.e., Indirect bidders were awarded 59.0% vs the 6auction average 56.0%, and up from 53.5% last month. It was also the highest Inidrect award since August 2017.

Overall, a very solid auction and one which sets the stage for today's second, benchmark bond auction of 10Y paper set for 1pm.


Cutter Mon, 12/11/2017 - 13:14 Permalink

If the 3 year yield is now where it was in 2009, the 10 year could move above 3 percent, where it was in 2009 (the high was 3.85 percent).  With our debt, ouch.