MBS LUNCH: 2yr AUCTION RESULTS
Great auction results and great reaction so far...
- HIGH YIELD 1.020 PCT, AWARDS 3.21 PCT OF BIDS AT HIGH
- BID-TO-COVER RATIO 3.63, NON-COMP BIDS $437.1 MLN
- 1PRIMARY DEALERS TAKE $12.78 BLN (HUGE PERCENTAGE OF TOTAL) OF 2-YEAR NOTES SALE, INDIRECT $19.32 BLN (44%, not bad)
The wire didn't have to hit the eyes for long before we knew this was a good one...
MBS and Tsy's immediately improved AND THEY'RE NOT DONE. Although this doesn't guarantee an outright facemelter considering the market will want additional confirmation from remaining auctions before unwinding all of their concession, it's every bit as good as it could have been and we're likely to see the maximum amount of gains the market was willing to give for a "best case scenario" auction.
Yes, we know those gains will amount to bond improvements on the day, but exactly what it does to the yield curve, and to what it extent profits might be taken or ranges moderated ahead of the remaining auctions is still very much unknown. At least the float decision is easy at the moment, but class isn't excused for the day yet... Stay tuned...