Fallen: The treasuries bumped through the day's good looking auction but were unable to retain the bid and slid back while doing little with the Beige Book. The impressive auction, that makes 2 solid goings in a row, is not a harbinger of how tomorrow's 30-yr will roll, but it will hike the bar a bit. Even as the yield came in lower, not quite at a record level, the market could not get around itself and pretty much gave it all back in thinned trade that was stuck watching stocks. Tomorrow's 30-yr offering caps the week's auctions while the previous $16 bln 30-yrs saw 3.954% with a bid-to-cover of 2.77 and an indirect bidder participation rate of 46%. While the yield was a little higher than the market may have liked, the other measures of demand were all above average and the direct bidder take was also strong at 18.6% (the anonymous buyers who are able to bypass the primary dealers and are often rumored to be China or OPEC or hedge-funds, although some just assume they are banks hoping to become primary dealers and are using their access to "show their mettle" as well as disguise themselves from the standing dealers). The curve was leaning steeper into the auction, where it flipped, but resumed the steepening bent off the Beige book with the 2-10-yr yield spread 214.1 within a range of 216.5 and 210.5. The dollar was under pressure most of the session before guttering near 82.50/60 while the euro was stalled near 1.2725. The yen lost some of it flight-to-quality bid and backed off in general with 84.00 a barrier. The day ahead has the $13 bln 30-yr reopening (13) with data the usual initial and continuing jobless claims and trade balance (8:30). Oh. The Fed will be in buying little bits in the 2013 to 2014 maturity space
 

Offered: The dollar has been sluggish all session with the index holding near 82.50 sneaking back some on the Beige Book, but generally quiet. The euro has been benefitting from renewed risk interest, but has backed off its midday bounce to track around 1.2725. The yen continues to get leaned on as safety players roll out, sitting just shy of 84.00 on the buck while sneaking back some on the euro but still giving up near 107 per. Gold has been backed off to near flat with spot 1255.75 (+0.20) while crude got a boost on the day to settle 74.67 (+0.58). Europe will see some inflation numbers ahead, but they are unlikely to cause much stir.
 

Slide: The market has been backed off again with the auction and Beige Book out of the way trade will look out to the 30-yr sale tomorrow. There is little in the way of data going on and no Fed-speak to speak of, so things should remain thinned outside the auctions while size supply at least through tomorrow will weigh. Traders report the Oct 126-50 calls saw some action, the 10-yr futures are running 124-14. The market will be stuck now watching stocks as the S&P wrestles with the 1100 line in the sand.
 

Issues: Medco Health selling $1 bln 5-10-yrs

 

 

Beige: According to stories out of the 12 Fed districts were mixed showing growth from mid-July through Aug, but with widespread signs of a deceleration compared with preceding periods. Economic growth at a modest pace was the most common characterization.
 

Sputtering Recovery: The auction was well received and the market was able to key off that while the issue of supply in general continues to drag. The curve has been run steeply flatter with the 2-10-yr yield spread 211.8 from 216 plus. The 10-yr has gotten back about 4.5 basis points on the push back, while the 5-yr has gotten about 3.4bps. Trade is heaving a sigh o f relief on the impressive offering, but the market is very crowded with massive amounts of issuance coming at it from all sides, with another $1.75 bln offering of assorted maturities out of Brazil announced right on the auction while American Express doubled its original $1 bln in 5-yrs

 

Auction Out: The reopened $21 bln 10-yrs draw 2.670% with a 3.21 cover and an indirect bidder take of 54.7%. Solid
 

More Cowbell: The market is sliding further on safety unwinds and ahead of an uncertain auction with boatloads of supply being dumped on the market. The long end continues leading lower and the market has given back the bulk of recent gains with 2.69% the next barrier on the 10-yr. Trade is offering up some concession for the day's auction, which is being eyed suspiciously with just an average outing likely to result in a relief rally. Un-traumatic auctions out of peripheral European players helped suck out some of the safe-haven bids, while talk of European banks in looking to purchase their respective bonds further out the calendar than had been done before has also spooked players. BBH's Marc Chandler notes "Some report that some European central banks may have called dealers and inquired into prices, but haven't dealt. This alone influences psychology and there is something that Japanese officials should note in terms of tactics." The previous $24 bln 10-yr auction saw an on target yield at 2.730% with a 3.04 bid-to-cover an indirect bidder participation rate of 45.8% and 10.6% to direct bidders. The 10-auciton average adds up to a 3.06 bid-to-cover and an indirect bidder participation rate of 39.2%. The curve has been steepened with occasional profit taking blips flatter with the 2-10-yr yield spread running 215.3 with 218 in sight. The dollar has been on offer with the index stuck under 82.50 with some support at 82.35. The euro has been trying to ring up 1.2770, and will see further resistance at 1.2780, but remains on offered on the Swiss. The yen has been dipping to give up just under 84.00 per buck while having found some support near 107.00 against the euro as risk returns to vogue. The $21 bln reopened 10-yr results are sitting in the wings (13) along with the speed bump of a Beige Book (14) and consumer credit (15).
 

On Offer: The buck has been backed off the overnight highs, dropping 0.6% from the 82.92 point, where it visited only briefly, getting stalled out near 82.50. The euro has recovered about half its losses yesterday but remains 2% and change off the week's best levels and may get stuck near 1.2720/25, while the Swiss remains in record territory on the common currency. The yen has been backed off to the 84.00 figure but is spinning back mid-day as positions are squared. The yen should be knocked back to hold through that point on the buck as the safety plays get unwound while the also getting clocked on the euro back to over 107.00 per with an eye to 107.50. Gold has been pushing back toward the June highs hitting 1262 plus, but has lost some luster as stocks rally and is seeing a midday sell off with spot 1257.63 (+2.07). Crude has been bubbling higher, 74.66 (+0.57), back to Friday levels, as stocks add value.
 

Issues: American Express to sell $1 bln 5-yrs

Goodrich selling minimum $500 mln 10-yrs

Hewlett-Packard selling minimum $500 mln 2-yr floaters and 3-5-yr fixed

 

Auction on Deck: The day's auction is a toss up in terms of how well it goes off, the 3-yr's relative success being no harbinger of how the longer durations will fair. The Aug new issue of $24 bln 10-yrs saw 2.730% with a 3.04 bid-to-cover an indirect bidder participation rate of 45.8% and 10.6% to direct bidders. A solid offering with the yield right on target and well received overall. The 10-auction average adds up to a 3.06 bid-to-cover and an indirect bidder participation rate of 39.2%. The current yield level, 2.655% to 2.665%, is a little lighter, but not that far off comparatively. The speed bump of the regular, but larger sized $34 bln 4-wks, should barely cause a ripple while the $21 bln reopened 10-yrs will be the main focus. However, the supply, global and corporate, and global corporate will be crowding the offering.

 

Slumped: Bonds are still on offer with additional pressure heading into the auction. The long end is leading lower and the curve steepening while the market kicks around waiting for the auction while the Beige Book will be just a curiosity. The 2-10-yr yield spread is running 213.8 from 208 and change. There is some caution ahead of the 10-yr auction with the extreme low yields and a hefty batch of reopeneds being dumped on the market (traditionally less appealing to foreign interests).

 

Bonds are coming back some but trade is light and pressure on ahead of the auction
 

Offered: Trade is lower into what will likely be a quiet day. Data is light with Beige Book (14), consumer credit (15) and Fed-speak has MN's Kocherlakoda (14:30). The day's key event will be the $21 bln reopened 10-yr auction (13).
 

Treasuries are off slightly as the market got a little mental relief from Portugal's successful bond sale.  However, the main attraction is the Treasury's $21 bln 10-year Note auction later today (1:00 p.m. ET).  Yesterday's 3-year Note sale was average at best and today's 10-year sale will give some more insight as to how much conviction there is behind these current yield levels as demand has been a bit light as of late.  It is a moderate data day with only consumer credit and the Fed's Beige Book on tap.  Global bonds are mixed and only moderately changed for the most part.
 

Bidder Up: The market was able to take back a chunk of ground with the long end leading, pushing back to Thursday levels with the 10-yr nicking 2.598% after sending much of the afternoon ticking around the 2.62% point. The day's auction went off well enough with the 3-yr seeing a bit of a higher yield but well within expectations, and otherwise solid demand. There maybe a less smooth outing on tomorrow's reopened 10-yrs with extreme low yields and heftier duration, but as the grab for yield goes on it should be at least an average offering. There will also be a batch of $35 bln 4-wks on the block. The day ahead has some late session data with the Fed's beige book. The curve was swung well flatter, to Friday levels with the 2-10-yr yield spread running 210.8 while the 3-mo-10-yr was sent to 246.8 from 257.7. The dollar was able to hold gains but was unable to get up and hold over 82.80 on the index while the euro has slumped off through 1.27 to 1.2682. The yen was run up across the bored as safety came back in to play but backed off late on squaring on the buck but continuing to churn better on the euro. The day ahead has the Beige Book (14), consumer credit 915) and Fed-speak has MN's Kocherlakoda (14:30). The day's key event will be the $21 bln reopened 10-yr auction (13).