While there may be a massive shortage and potential short squeeze forming at both the 10Y and 30Y part of the curve, there is far less euphoria when it comes to the short end, as confirmed moments ago when the Treasury sold $24 billion in 3 Year paper at a yield of 1.039%, a 0.3bps tail to the 1.036% When Issued, and higher compared to last month’s stellar 0.844%.
The internals were likewise lackluster, with the Bid to Cover of 2.710 coming at the lowest level since July 2009. Indirects of 46.2% were slightly above last month’s 41.5%, but below the TTM average of 50%. Directs also pulled back taking down 9.1% of the auction and leaving 44.7% to Dealers, their largest allotment since December 2014.
Overall a poor auction, whose concession was largely as expected.
Now the real question is what happens during this week’s “main event” – tomorrow’s 10Y and Thursday’s 30Y auctions, both of which have been massively shorted going into the auctions, and which – should something changed materially in the next 24 hours, could see a dramatic short squeeze if and when all those shorts have to unwind their positions.
via Zero Hedge http://ift.tt/1U23v6K Tyler Durden