Steller 30Y Auction Sees Highest Foreign Central Bank Buying On Record, Helped By Short Squeeze
By Tyler Durden
Heading into today’s 30Y auction, Stone McCarthy said that “specials galore”, noting that “though pressure might have eased up on the 3-year and 10-year, it has tightened on the 5-year and 2-year notes. Both issues are trading special at zero basis points this morning. Most off the run issues are still trading near GC, though the old 30-year bond is a bit tight at 25 basis points.”
That hinted to us that there may be a small short squeeze as the US sells $12 billion in 30Y bonds today, helping the auction following this week’s disastrous 3 and 10Y auctions, and sure enough moments ago the high yield on the 30Y printed at 2.172%, stopping through the 2.176% When Issued.
However, the high yield was just the beginning for this spectacular auction.
The bid to cover jumped from 2.423 to 2.485, the highest since last September’s 2.536.
But the real story was the internals, where 68.5% was allotted to Indirect Bidders – this was the biggest allottment to foreign central banks and official buyers on record. Directs took down 8.4% of the auction and Dealers were left with 23.1%, the lowest on record as well.
So while demand may have been lacking for shorter maturities, when it comes to longer durations, 2.17% is seemingly a tremendous bogey and everyone wants a piece.
Source: Steller 30Y Auction Sees Highest Foreign Central Bank Buying On Record, Helped By Short Squeeze
