With the 10 Year When Issued trading comfortably above 3% around the time of today’s auction conclusion, it was expected that today we would see the first 10 Year auction, in the face of the WE6 9 Year 10 month reopening, pricing north of 3% for the first time since May 2011. Sure enough, moments ago the Treasury announced that it had sold $21 billion in benchmark paper at 3.009% tailing just slightly to the 3.007% When Issued. But while the yield was notable, the Bid To Cover actually picked up from last month’s 2.61 rising to 2.68, almost exactly in line with the TTM average of 2.69, and showing a modestly increase in recent BTCs. The internals were a snoozers, with Dealers getting 39.8%, one percent above the 12 month average, Indirects were allotted 46.6% – below last month’s 48.9% but above the 41.8% TTM average, and Directs got the balance, or 13.6% of the final allottment. Largely, a vanilla auction.
Perhaps the only notable item is to keep track of whether dealers sell it back to the Fed: during yesterday’s POMO, even though the OTR WE6 CUSIP was not part of the exclusions, dealers sold precisely $0 back to the Fed. Now that they have another $8 billion of the issue, expect this to change at the first possible POMO opportunity.
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5JS9FEhbbt8/story01.htm Tyler Durden