10Y UST Auction: 'managed' to get finally a good one?

Discussion in 'Financial Futures' started by Bernard111, Nov 10, 2005.

  1. After the disappointing 3Y and 5Y , finally today we had an excellent 10Y auction with discrete cover ratio (2.24) and highest ever indirect bidding (55.6% vs. 29% average).

    Do you think the foreign investors (part of the so-called 'Indirect') forced themselves to bid at the auction -so renewing their confidence on USD and USA system - because otherwise all their portfolios could have risked to be crashed by another disappointing auction pushing the yields much higher (systemic crisis)?
  2. Good question Bernard. What positions do you think they are holding that would risk being crashed? Why would a disappointing auction hurt foreign investors? Please explain.

    My immediate take was that it was a last ditch effort to divest the euro currency and hedge themselves in the appreciating dollar. Thoughts?
  3. or the Caribbean Banking Centers came up with some more cash.
  4. We have to wait for about one month to know the composition of the bidders for that auction.
    This is a comment from MNI newsfeed:
    >>US TSYS/10Y: The buzz around the indirect bid is that while there was some moderate foreign central bank buying in the indirects, there also was good US account buying, in particular the chat is that a large fund could have bought a big part of this auction, (perhaps the one that sold TIPS on Wed?). Plus there also appears to have been other US accounts of various stripes buying. Bottom line: While no one will know for sure who bought what exactly until Treasury releases its foreign/domestic buyer
    breakdown in a month, those accounts fearing a foreign central bank buyers' strike can be assuaged by this auction. Of course there will be great curiosity when Treasury puts out that buyer breakdown.
  5. Surdo


    How do you account for large overseas Fixed Income investment in a Hedge Fund or MF like PIMCO? None of those reported foreign numbers are that accurate.
  6. Surdo


    >>>5 YEAR AUCTION<<<

    Stone & McCarthy (Princeton) -- The 5-year note auction didn't go especially well, as was the case last month. The bid cover was low and the auction stopped a full bps above the 100pm bid side.
    The auction stopped at 4.435%. The WI was bid at 4.425% as of the 1:00pm bidding deadline. 30.32% of bids at the high yield were accepted. The issue will have a 4 3/8% coupon.

    The bid cover was low at 2.38, relative to an average of 2.52 over the prior twelve 5-year note auctions. Non-comps were low at $90 mln, relative to an average of $106 mln.
  7. mcurto


    But we are bid. 7000 ten years were bought 5 minutes before the auction from 12.5 up to 14. Still holding at those levels. Dealers set-up short before hand and don't want to have to cover again. They got screwed doing that Monday when the foreign buying and CB's came in yesterday.
  8. Surdo


    >>>10 YEAR AUCTION<<<

    Stone & McCarthy (Princeton) -- The 10-year note reopening today was a little sloppy. The auction saw light demand overall, but still stopped pretty much right on the 100pm bid side. Dealers took down the vast majority of the auction.
    The auction stopped at 4.490%. The WI was bid at 4.489% as of the 100pm bidding deadline. At $8.0 bln, today's reopening auction is the same size as the June and September 10-year reopenings. 10.42% of bids at the high yield were accepted.

    The bid cover was on the low side at 2.19, relative to an average of 2.45 for past 12-year note auctions, which includes both original issues and reopenings. Non-comps were quite low at $17 mln.
  9. mcurto


    And again we hold the bid with the auction being dealer driven. There has to be a small squeeze out of this issue looks like. Still a light volume rally, only 500k trade so far in the tens. This issue might be a little rich vs. off-the-runs, but they have seen solid buying as well by foreign banks.
  10. are they anticapating a change in fed statement next week?or do is it more of liking the yields? with gold and bonds buying i always wonder if these guys see something crappy on teh horizon:)
    #10     Dec 8, 2005