One month ago, when the Treasury sold 3 Year paper the reception was rather lukewarm when ahead of the March FOMC there was some concern that the Fed may actually hike. Now that any speculation of a rate hike has been shelved indefinitely, there was no problem for the US Treasury to sell this month’s batch of 3 Year paper. With the WI trading at 0.894% at 1pm, the high yield printed 0.890%, stopping 0.4 bps through the When Issued.
The Bid To Cover was in line with last month’s 2.710 rising fractionally to to 2.721 and still relatively low for the series, but it was the internals which saw a dramatic surge in foreign central banks and official entities, as the Indirect takedown soared from 44.7% to a whopping 56.0%, the highest since June 2013. Dealers were allotted 32.6%, far below the TTM average of 49.2%, while Directs rose modestly from 9.1% to 11.5%.
The curve’s reaction has been favorable and resulted in a floor to the selling which has accompanied today’s dramatic risk on euphoria driven once again by the usual suspect: a headline attributed to an unnamed political source.
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