If anyone had expected that today's record AB InBev deal would lead to a tail in the just concluded $21 billion 10-Year (technically 9 Year-10 month CUSIP M56 reopening) auction, they would be very disappointed, when moments ago the US Treasury announced a high yield of 2.09%, stopping a whopping 1.5 bps through the When Issued 2.105%, and the lowest yield since October's 2.07%.
The Bid to Cover of 2.77 also rebounded solidly from both last month's 2.64 and the TTM average of 2.63, and was in fact the highest since December 2014.
But the real shocker was in the internals, where the Directs took down at modest 11.3%, but it was the foreign central bankers, aka the Indirects, who took down a whopping 71%, the second highest on record, and just 0.3% shy of the record high hit in February 2011.This left just 17.7% to Dealers, the second lowest on record.
This answers our question what will happen to the Treasury complex once all rate locks from today's mega AB InBev deal are finished. Here it is visually as seen in the reaction of the 10Y after leadning just how strong the auction was contrary to some expectations.