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Mediocre, Tailing 10Y Auction Prices At Lowest Yield Since Nov 2016

Courtesy of ZeroHedge. View original post here.

If yesterday's 3Y auction was both good and bad, good as it stopped out and saw solid Indirect participation, bad as the bid to cover plunged to a 10+ year low, then today's 10Y reopening of the 9 year 10 month CUSIP 6T2 was both bad and good, and in many ways was a mirror image of yesterday's 3 Year.

First of all, while on Tuesday the bond auction stopped through, today's sale of benchmark paper which stopped at 2.064% tailed the When Issued 2.057% by 0.7bps. Even so, the high yield dropped by 7.2bps from 1.129% in June, and was the lowest yield going back to November 2016.

Meanwhile, the internals were somewhat better, with the bid to cover dropping modestly, but nothing compared to yesterday's plunge: at 2.41, the BTC dipped from 2.49 and just below the 6 auction average of 2.44; still there have been numerous auctions in the past three years whose BTC was even lower.

As for the bid breakdown, 60.8% went to Indirects, a decline from last month's impressive 65.6%, if above the 62.2 recent average, and with Directs taking down 12.9%, precisely on top of the six month average, this left 26.4% for Dealers, which also was just above the average.

Overall, a mediocre auction, with the bond market paring some gains after the size of the tail was announced, even if the remainder of the auction was generally solid.


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