The demand for Tim Geithner paper continues to be insatiable, as today's 5 Year auction prices at an all time low yield of 1.26%, a drop from the previous record of 1.374% from last month. The Bid To Cover continues to demonstrate just how schizophrenic the market has become, where all normal investors buy bonds to front run the Fed, while the Fed-PD complex itself is buying stocks. Make sense yet? Either way, at 2.96, the BTC was the second highest ever, only lower than July's 3.06. And, just like in the previous auction, the Indirects continue to creep ever to the right, taking down the majority of the auction, or 50.1%, leaving 8.7% to the Directs, and a healthy 41.2% to the Primary Dealers, which of course are merely warehousing the paper for a few weeks/months until they flip it back to the Fed for a tidy profit, and use the proceeds for some more 100 P/E stock purchases. Thank you POMO!
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