The creep ever higher in the short-end of the belly continues, with the first 1%+ 3 Year auction pricing since July, specifically today's $32 billion in 3 Years printed at a 1.027% high yield, a 19% jump in one month. The increase in yield to 6 month highs resulted in an increased in demand as well, with the Bid To Cover coming at 3.057, still lower than the trailing 12 month average of 3.121. As can be seen on the chart below, after Indirects virtually withdrew from bidding in October just as the Fed attempted to make it clear that the short end was going to zero, they have been coming back since, and took down 39.4%, with Primary Dealers being allocated 44.5% and Directs 16.2%. Of the PD bids, we expect that much of the auction will be siphoned right back to the Fed in the next 3-4 months, with all the interest on the auction eventually being remitted back to the Treasury in the latest confirmation that all of US public finance is now a ponzi fraud.
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