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Strong 30-Year Auction Sets The Stage For Yellen’s Final Rate Hike

Courtesy of ZeroHedge. View original post here.

After yesterday's stellar 3Y morning auction, and disappointing 10Y afternoon auction, today's reopening of the 29-Year, 11-month RZ3 Cusip was right down the middle.

The bond stopped at a high yield of 2.804%, stopping through the When Issued 2.808% by 0.4bps, the third consecutive stop through in a row. The high yield was above November's 2.801% but below October's 2.870%.

The internals were solid but not unprecedented: the Bid to Cover rebounded from last month's 2.225 to 2.479, and above the 6 month average of 2.318. This was the second highest BTC going back to July 2016 with only October's 2.53% higher.

The Indirect Award was 61.9%, unchanged from last month, and fractionally below the 6 month average 62.6%, while Directs took down 9.0%, above the 6MMA of 7.1%, and Dealers were left with 29.1%, below last month's 31.8% and below the 6 auction average of 30.3%.

Overall, a solid – if not spectacular – auction heading into tomorrow's FOMC meeting where Janet Yellen is expected to make her last 25 bps rate hike announcement. That said, the fact that today's auction wasn't a disaster, and foreign interest was solid, confirms that the curve will continue to flatten as the Fed rises the short-end every few months, ultimately inverting the yield curve some time in mid-2018.


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