Posted by on November 23, 2016 3:41 pm
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Categories: Auction Auction theory Auctions Banknote Business Business economics Business models Economy Fixed income analysis High Yield Language Yield

After 4 consecutive poor-to-passable auctions, moments ago the Treasury sold $28 billion in 7 Year paper in what can only be defined as a blockbuster auction.

The High Yield of 2.215% stopped 1.6 bps through the When Issued, the biggest “stop through” in over a year. The Bid to Cover likewise saw a surprising spike in demand, jumping from 2.491 to 2.683, the highest since April 2014, and well above the 6 month average.

The internal also were gangbusters, with Indirects taking down a record 72.65%, leaving only 9.36% to Directs and 18% to Dealers, the second lowest on record.

In sum: on the day in which the 10Y hit the highest yield since July 2015, if the market was looking for a clearing yield at which both foreign and domestic buyers would come out of the woodwork for US paper, somewhere around 2.2% in the belly of the curve – if only at this moment – appears to be the answer for now.

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