Strong Demand For 10Y Treasury Auction Soaks Up Massive Debt Supply

Having earlier sold 3Y Notes and 6M Bills to a surprisingly eager market in two rather strong auctions, at 1:01pm the Treasury concluded today's sale of $145 billion in paper, with the sale of $51BN in 3M Bills and $21 billion in 10Y Notes, in two more strong auctions.

The high yield of 2.889% was on the screws with the When Issued, and 9bps above February's 2.811%. It was also the highest yield since January 2014.

The Bid to Cover was 2.50%, above last month's 2.34 and also above the 2.45% auction average. The internals were also on the strong side, with the Indirects taking down 66.2%, which slightly below February's 67.5% was above the 6 month average of 64.8%. Directs were awarded 6.5%, just higher than the 5.4% last month, leaving 27.3% for Dealer.

Separately, the Treasury also sold $51.0b in 3M bills, at a bid-to-cover of 3.13, well above the 2.95 6 auction average. And refuting speculation that foreigners are fleeing Bills, Indirect bidders were awarded 44.7% of the takedown vs six previous auction average 41.5%.

Overall, today's massive supply was soaked up without a glitch, and with far less concessions than many had expected.

As a result, the TSY complex held gains after today's auctions, with muted price action following the 10Y auction, and with the 10Y yield lower on the day by ~0.5bp.



TeethVillage88s stacking12321 Mon, 03/12/2018 - 13:46 Permalink

Big Players Distort all US markets of all types: TBTF Banks, Prime Dealer Banks, Elites, Institutional Investors, ETFs, Foreign Agents, Foreign Players, Sovereign Wealth Funds... I'm not an Investment Advisor, but Brokers love this situation.

- Big Banks can RE-hypotheticate US Treasuries since they are the best kind of Collateral, but you can't

- Small Guys lose as Foreigners buy up Real Estate, Businesses, US Treasuries, US Bonds & Equities... we get more ZIRP/LIRP, then QE, then State Capitalism crafted Bailouts & MIC Spending/MIC Wars... all with no Whistleblowers since Journalist have careers to worry over, and Inflation, Planned Inflation corrupts everyone and disillusions our kids/youth while striking huge blows to Fix Income People

In reply to by stacking12321

Harry Lightning stacking12321 Mon, 03/12/2018 - 13:52 Permalink

I would love to know what the Treasury promises the dealers to buy this much paper after Friday's jobs report showed that rates have to go higher. Its illegal for a broker to guarantee a customer against market losses, I wonder if that law applies to the US Treasury ? Because that is the only way I can imagine that dealers would accept less than 3% for all these billions in new issues...

Next week the truth will come out, if Treasuries are getting dumped at yields higher than accepted at today's auctions, you'll know that dealers have no hesitation about taking losses as those losses probably are indemnified by the Treasury.

Just once the investment community should stop subsidizing the market manipulation that goes on for this government to finance its humongous debt that probably never will be paid down at face value. People are sitting in Federal prisons right now for market manipulation and they didn't do anything near as unlawful as is regularly practiced by the Treasury and the Fed in their manipulation of markets. Its disgusting.


In reply to by stacking12321

TeethVillage88s rejected Mon, 03/12/2018 - 14:01 Permalink

Primary Dealers (but not Sullivan & Cromwell of Dulles fame)

Bank of Nova Scotia, New York Agency
BMO Capital Markets Corp.
BNP Paribas Securities Corp.
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse AG, New York Branch
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman Sachs & Co. LLC
HSBC Securities (USA) Inc.
Jefferies LLC
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mizuho Securities USA LLC
Morgan Stanley & Co. LLC
Nomura Securities International, Inc.
RBC Capital Markets, LLC
RBS Securities Inc.
Societe Generale, New York Branch
TD Securities (USA) LLC
UBS Securities LLC.
Wells Fargo Securities, LLC

In reply to by rejected

abgary1 Mon, 03/12/2018 - 14:15 Permalink

When the central banks were bloating their balance sheets there was all this talk about a shortage sovereign debt on the markets and now there is talk of a lack of demand.

Mike Shedlock probably is right when he wrote that there may be pent up demand for US debt.

Ink Pusher Mon, 03/12/2018 - 17:33 Permalink

I'd "demand' that anyone selling this crap go away...please don't come back,I don't want any.

Those are my only cases for "demand" in the bond world.