After a good 3 yr note auction, the 10 yr auction was much more mixed. The yield of 2.195% was above the when issued of about 2.19% but the bid to cover of 2.54 was above the one year average of 2.44. Dealers got stuck with 29% of the auction which is exactly the average of the previous 12 months.
Bottom line, we can call this auction a ‘nothing burger.’ I’ll make sure never to use that phrase again but I unfortunately can’t get it out of my head after hearing it last week after Comey spoke. After a good 3 yr and a mediocre 10 yr one would think we’d see some steepening in the curve but not the case today. The 2s/10s spread is back down at the multi month lows at 84.5 bps. Again, the market is sniffing out that the Fed is hiking rates into a mediocre economy with one of the most interest rate sensitive sectors, autos, that is now entering a recession.
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.