Zerohedge.comToday's auction of $16 billion 30 Years closed at a high yield of 3.954% (55.98% allotted at high), and came at a 2.77 Bid To Cover: the lowest since May. The yield was the third lowest in history, higher only than the February and March 2009 auctions (3.54% and 3.640%). Direct Bidders came in at 18.6% - a surprisingly high number, and bigger than the previous auction, yet nowhere near the record 29.6% from March of 2010. What was most surprising was the record low Primary Dealer participation (blue segment in attached chart) - the Fed's lapdogs took down just 35.3% of the auction: the lowest in many years, if not ever. Are the PDs turning their back on the inflation risk associated with holding LT securities, and/or do they think they would be unable to offload these to retail customers? Keep an eye on PD take down in future auctions for further indications on this.
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