If yesterday’s 3Y auction was impressive, and stopped well through the When Issued (as hinted by the negative repo rate), today’s 10Y was an absolute blockbuster, stopping a whopping 2 bps through the 1.73% When Issued – the biggest stop through since September 2013 – on a yield of 1.71%, the lowest yield since December 2012.

The internals were just as astounding, with a whopping 73.5% Indirect (aka foreign central bank) take down, the highest on record, and with 11.8% in Directs inline with recent historical averages, this meant that the Dealers were left holding the second lowest on record as foreign central banks scrambled to bid up as much of the paper as they could.

Perhaps the only weak spot was the Bid to Cover which dipped fractionally from 2.75 to 2.68.

Looking back at the results, one wonders just how much of the yield differential between US and foreign paper will collapse in the coming days if indeed foreign demand (mostly by central banks who are now clearly rushing into US paper) for OTRs is as high as today’s auction indicated.

 

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