Surprisingly Strong 30Y Auction Sees Second Lowest Dealer Takedown On Record

After two mediocre, tailing auctions earlier this week, the Treasury concluded the sale of coupon paper this week with a bang, selling $16BN in Notes in a 30Y reopening with a bang.

The high yield of 3.165% stopped through the When Issued by 0.2bps, a far cry from last month's 2.3bps tail, and the lowest yield for the long bond since September as the curve has repriced the newly dovish Fed as well as the growing economic slowdown in the US.

The Bid to Cover meanwhile jumped from last month's 2.058, one of the lowest on record, to 2.308%, right on top of the 6 auction average.

However, the surprise - as has been the case recently - was in the internals, where as noted previously the mystery slump in Direct takedown is now long gone, and in December, Directs took down 11.5%, up sizably from 2.9% in November, and above the 9.3% auction average. And while Indirect demand was solid worth 66.4% of the auction, the highest takedown since January's 71.5%, it was Primary Dealers that was the outlier this time, as in December they were left with just 22.1% of the auction, the second lowest allotment on record.

Overall, surprisingly aggressive demand for 30Y paper especially in light of recent relatively poor auctions, and the clearest indicator yet that according to the buy side the US economy is clearly slowing down.

(Click on image to enlarge)

Disclosure: Copyright ©2009-2018 ZeroHedge.com/ABC Media, LTD; All Rights Reserved. Zero Hedge is intended for Mature Audiences. Familiarize yourself with our legal and use policies every time ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.