We may well have reached the point where every single bond auction has to be a new record in something, or else (the else being the point where a reversal in yields becomes self-sustaining with trillions and trillions of ZIRP cash sloshing around and the smallest increases in rates could wreak havoc within the entire system)... Today, the record in the just completed $32 billion 3 Year auction was the record high Bid To Cover, which came at an all time high, obviously, 3.73, compared to 3.624 before, and 3.314 last 12 auction average. The bond priced at 0.37% (44.86% allotted at the high), with the low yield coming at a tiny 0.276%. Naturally, there always is more than meets the eye, with the bulk of the demand coming from Dealers, who took down 56.1% in the never-ending game of repo-mediated ponzi, while Indirects were accountable for just 38.%, and Directs coming at a 2 year low of 5.3%: this should probably be a warning sign to some. Probably a far more important question is why the Treasury is issuing debt in the first place: as Zero Hedge first (and so far only) pointed out last week, the Treasury has, or rather had, a $25 million buffer before it breaches the ceiling - in other words no capacity for gross issuance (not even net of the $77 billion Fed remittance). Simply said, this means every auction means more plunder from government retirement accounts - a replay of what happened in late July. Obviously, at some point the president will make it a point to push the interim debt ceiling higher, just probably not before the state of the union speech.
