- 10 year auction has impressive demand, but at higher rates.
- 3.45 Bid To Cover, but 3.735 % high yield with 70.94% of the bids at high yield
- MBS and Treasuries both slightly better on the announcement
- 4.5's are now down only 2 ticks on the day at 100-29 and 10yr yields are back down to 3.72+ from 3.74+
Here is a breakdown of the auction results:
9-YR 11-MO NOTES
YIELDS
High 3.735 pct
Median 3.700 pct
Low 3.636 pct
PRICE/ACCEPTANCES
Price 99.090493
Accepted at high 70.94 pct
Bid-to-cover ratio 3.45
AMOUNTS TENDERED AND ACCEPTED (dollars)
Total accepted 21,000,013,800
Total public bids tendered 72,466,493,000
Competitive bids accepted 20,829,510,800
Noncompetitive bids accepted 70,503,000
Fed add-ons 248,452,700
Primary Dealer Tendered 49,661,000,000
Primary Dealer Accepted 9,857,410,000
Primary Dealer Hit Rate 19.8% of their bid
Primary Dealer Total Award 46.9% of issuance
Direct Bidder Tendered 8,401,000,000
Direct Bidder Accepted 3,653,110,800
Direct Bidder Hit Rate 43.5% of their bid
Direct Bidder Total Award 17.4% of issuance
Indirect Bidder Tendered 14,233,990,000
Indirect Bidder Accepted 7,318,990,000
Indirect Bidder Hit Rate 51.4% of their bid
Indirect Bidder Total Award 34.9% of issuance
Looking at the resistance at 3.72, that's the first challenge for the bond market if it would like to improve this afternoon. Once that breaks (if it breaks), the rest of the day is very likely "there or better," but until then, stay tuned. For the moment anyway, risks of reprice for the worse are greatly decreased, and probably favor a reprice for the better to a small extent, though I'm not comfortable assuming a rally will take place with these auction results until we've seen some more trading.
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