Blockbuster long bond auction
The only weak spot was the bid-to-cover ratio, which came in at 2.4 (down from 2.69 in the last auction). That means $2.40 worth of bids were submitted for every $1 of debt being sold. But all in all, it was a strong auction. Long bond futures are surging on these results -- up 1 13/32 at last count. Yields on the benchmark 10-year Treasury Note were recently down 12 basis points to 3.94%.
What accounts for the strong demand? Perhaps the fall in commodity prices, which may be easing some of the market's inflation concerns. Also, big institutional and official accounts may be stepping back a bit from things like agency bonds and moving into Treasuries instead.