10-Year Auction Results

Good or bad, strength or weakness, are often defined by one’s perspective. The 10-year bond auction, from the perspective of the bid to cover ratio, was viewed by many as strong (bond).

A look under the hood shows that the participation rate trends remain in tact. That is, decreased participation from primary dealers and increased participation from indirect bidders. Primary dealers, once representing 70% to 80% of accepted bids, have fallen below 40% in late 2010 and 2011. You might be asking, who has filled the void left by the primary dealers? Indirect bidders, customers placing competitive bids through a direct submitter, including Foreign and International Monetary Authorities placing bids through the Federal Reserve Bank of New York, and direct bidders have filled it. In other words, the public sector is increasing becoming the buyer of last resort.

Strong 10-year auction?, well, that’s a matter of perspective.

10 Year Auction Results:


Headline: Treasurys Pare Losses On Strong 10-Year Note Auction

A strong 10-year Treasury note auction on Wednesday helped the Treasurys market recoup some losses, but bond prices were weaker as U.S. stocks rallied.

Treasurys fell earlier as worries over the euro-zone debt crisis eased. The bond market also is bracing for an auction Thursday of $13 billion in 30-year Treasury bonds, which will wrap up this week's $66 billion government note and bond supply.

The amount of bids submitted for the sale was 3.3 times the amount on offer, compared to the average of 3.03 for the previous eight auctions.

Source: online.wsj.com
Source: treasurydirect.gov