After yesterday’s barnburner of a 10Y reopening auction, the only cloud on the horizon for today’s 30Y reopening auction of Cusip RS9 was that the paper had traded non-special in repo; in fact according to SMRA it was a stable 0.35%.
And, again, like yesterday all concerns about potential auction weakness promptly melted away when the resulted printed just after 1pm Eastern, when the High Yield was revealed at 2.475%, stopping through the When Issued by 0.7 bps (the May auction tailed by 0.8 bps), and the lowest 30Y auction yield since January 2015, which was just 0.5bps lower.
The bid to Cover confirmed the strength of the auction, rising from last month’s 2.20 to 2.42, above the TTM average and the highest since December 2015.
But it was a story of internals again, where while not quite a record like in yesterday’s 10Y auction, the foreign central banks and other Indirect bidders took down 64.9% of the auction, just shy of the 66% record hit last September. And since Directs took down 8.1%, this meant that Primary Dealers were left holding 27% of the final allotment.
Bottom line: another very strong auction, and not surprisingly, one which has pushed the market fractionally higher, even as the 10Y shorts are caught in a desperate and futile defense of the 1.70% support leve for the 10Y.
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