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$24 Billion 10 Year Auction Closes At 3rd Lowest Yield In History, 3.

Courtesy of Tyler Durden

Today’s task before the Fed and the Direct bidders was the clean, calm digestion of $24 billion in 10 years. And as expected, this passed without a glitch at a 2.73% high yield, the third lowest yield in history, following just auctions in December 2008 and January 2009. Yet unlike yesterday’s 3 Year auction, which also posted the highest Bid To Cover in history, today’s BTC was not as strong as in the previous two auctions. Is the yield on the 10 Year becoming so low as to not be attractive for the Primary Dealers? Indeed, the takedown by primary dealers dropped to 43.6% from 48.6%, and an average 46% in 2010. Direct bidders accounted for 10.6% of the auction, while Indirects took the biggest portion of the auction since November 2009, or 45.8%. It also appears the real yield on the auction would have been lower as the allotted at high was only 10.57%, while the median yield was even lower, or 2.669%, suggesting interest in the Dutch auction was even higher than demonstrated by the end result. Yet all eyes are focused on tomorrow’s 30 Year: as the 10 Year is now actively to be gobbled by the Fed, the 30 Year is the only orphan left in the curve without the Fed’s explicit purchasing, and as such, surprises are not unlikely.


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