Five Year Bond Auction Comes Weak Despite Fresh Record Low Yield

In sharp contrast to the "WTF" 10 Year auction from 2 weeks ago, which smashed virtually every record, and saw a record 45.4% direct take down, today's $35 billion in 5 Years was a pale comparison. Yes, the bond priced at a new all time low yield of 0.584% which tailed the When Issued of 0.578% at 1 pm, but that's as good as it got. The Bid To Cover was 2.71, far below the TTM average of 2.90; the Directs were just 5.2%, or the lowest since the 2.9% in November 2009, resulting in Primary Dealers once again forced to buy up more than half of the auction or 52.2%, leaving just 42.6% for the Indirects. In many ways the auction was a replica of yesterday's unimpressive 2 year auction. Tomorrow we have a 7 year which concludes this week's latest bout of bond issuance, and will show just what the appetite for the curve belly is. What is strange is that the EURUSD algobot took the flashing red headline of the results, and without even pretending to think about it, sent the pair 20 pips higher on what was effectively a weak bond auction, in the process pushing stocks well higher as well. We bring this up just to show what a joke a broken, centrally-planned market is.


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