In the first of the week's refunding auctions, which as we discussed last week were not only supersized to pay for the government's helicopter money but also now include a 20Y auction on May 20 - the first such tenor since the 1980s - moments ago the Treasury sold a supersized 3Y auction - coming at a record high amount of $42Bn vs $40Bn last month...
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... and a record low yield of 0.230%, which also stopped through the 0.231% When Issued, the first non-tailing 3Y auction of 2020.
The bid to cover jumped from 2.27 in April to 2.54, the highest since February and well above the 2.440 recent average.
The internals were quite solid as well, with Indirects taking down 54.4%, while Directs jumped from 4.1% to 13.1%, the highest since February, and leaving 32.6% to Dealers, the lowest since December.
Why the stellar demand? Because all the buyers know they just need to hold on the paper for a few days before they can flip it back to the Fed for some risk-free profits.
So a solid start to yet another upsized Treasury issuance slate - because those trillions in stimulus checks won't pay for themselves - although the real question is how will the 20Y auction price when it is offered next week to the public.
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