Thursday, February 10, 2011

QUICK UPDATE-- MORE TONIGHT

After a disastrous 3 yr auction on Tuesday, the market was fearful of the 10 yr on Wednesday. With the WI 10 yr bond trading to a high yield of 3.78 late Tuesday, there were thoughts of a 4% 10 year in the near future. But overnight the market stabilized and as the 10 yr auction approached the market started to push the current 10 yr to a 3.69 yld and the WI to a 3.72. Bam!! The bid for the new issue was a 3.665 ( no devil here)... 6 bps thru the 1pm bid and with 71% of buyers being indirect bidders, the street was left with the crumbs. The market rallied and ended the day at a 3.66 yield on the 10 yr. The amount of indirect bids was a record for this or any treasury auction. Overseas buying.. think Far East.. was the catalyst as they have been on holiday for several days and were not able to partake in last week's selloff.

On to munis. With a lackluster calendar and fear of a treasury selloff munis were wary. But at late day MMD was unchanged and there were some very notable trades on the long end that make us think the scale could be pushed today. South Carolina sold $325mm bonds on the short end and the bidding was pushy with the reofferings coming on the MMD scale.

More later with some thoughts on the $3.7 bil Illinois POB deal to be priced next week.

I guess Ms Whitney missed her flight to D.C..... or was she in flight away from there??

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