After yesterday’s mediocre 3 Year auction, there were concerns whether the Treasury would find willing buyers to soak up today’s $23 billion in benchmark 10Year Paper. Those concerns were promptly relieved moments ago when not only did the 10Y auction price stopping through the When Issued by a whopping 1.3 bps, but it was also the lowest yield since December 2012.
Yes, there were some ugly spots, such as the dropping Bid to Cover which at 2.56 was the lowest since August, but the overall take down showed little problem when parking paper with Direct investors, who ended up with 15.3% of the issue, the highest since May of last year, and while Indirects maybe did not end up with the near-record 71% from January, still were allotted a very respectable 62.3%, leaving just 22.3% for Dealers, one of the lowest takedown for the group in years.
In summary, if the Fed was hoping that its rate hike cycle would prompt a great rotation of demand out of Treasurys into stocks, it has clearly failed, and this very strong 10 Year auction was the latest confirmation of just that.
via Zero Hedge http://ift.tt/1SgJYyK Tyler Durden