Treasury yields are surging across the complex with the long-end steepening notably. Today’s 10.5bps jump in 10Y yields is the biggest percentage shift since early November 2013… and a significant tail in the 7Y auction just made things worse.
The long-end is suffering most…
But the selling is across the complex…
It is unclear how much of today’s bond sell-off was a factor in the just concluded 7 Year Treasury offering, but what is clear is that unlike yesterday’s strong 5 Year issuance, today’s auction was disappointing, starting with the High Yield of 2.25%, the highest since April’s 2.32% and tailing the 2.24% When Issued by 1 bp. And while the Bid to Cover was a slight improvement from last month’s 2.435 rising to 2.581, it was the internals where we saw a flight of Direct bidders, who only took down 15.2% of the auction. This was the lowest allotment since July 2012. The offset: a pick up by Indirects from 40.6% to 47.4% while Dealers ended up with 37.4% of the auction.
Regardless of the auction one thing is clear, the shorting of bonds today will continue until the squeeze, as has been the case for all of 2014, returns.
via Zero Hedge http://ift.tt/1xA8nAp Tyler Durden