Indirect Bidders Steal the Show at 10 Year Auction. Yields Lower as Shorts Cover
September 8, 2010 – 9:02 amPosted To: MBS Commentary
Treasury just auctioned $21 billion 10 year notes . Auction demand was healthy thanks to one group of bidders specifically. The bond market has responded favorably in post auction trading. The high yield was 2.67%, which was 1.5 basis points below the 1pm “When Issued” yield, indicating bidding was aggressive, mostly because the market was able build in a big pre-auction concession. The bid to cover ratio was 3.21 bids submitted for every 1 accepted by Treasury. This is the strongest btc ratio since the June auction. Primary dealers took down 38.3% of the competitive bid and 18.1% of what they bid on, both metrics are below average. This implies someone else was standing at the ready to support supply offerings. That someone else was indirect bidders! Indirects took home a whopping 54.7% of…(read more)