THE TREASURY SOLD $70 BILLION OF FIVE-YEAR NOTES AT 5.033 PERCENT — A 3.1 BASIS POINT TAIL, THE SECOND BIGGEST ON RECORD — AND THE DEALERS ATE WHAT NOBODY ELSE WANTED

The Treasury sold $70 billion of five-year notes on September 23. It priced at 5.033 percent against a when-issued level near 4.9999, a tail of 3.1 basis points. TFTC and ZeroHedge both call it the second largest tail on record for this tenor.

The demand split is where the money is. Indirect bidders, which is mostly foreign central banks and funds, took 54.31 percent, down from 61.51 at the last one. Directs took 29.92. Primary dealers were left with 15.8 percent, about $11 billion. Bid to cover came in at 2.21 against 2.37 prior, which TFTC counts as the weakest since December 2018. Dealers do not decide to buy. They are obligated to bid. When the rest of the room steps back, the dealers hold what nobody wanted.

Price the number. 5.033 percent on five-year money is what the government pays to borrow, and $70 billion at that rate is about $3.5 billion a year in interest, for five years, from this one auction. There is another one next month, and the month after that.

Bitcoin has no auction. There is no room where demand can step back, because there is no issuer in it asking for money. The supply schedule was written once and does not renegotiate when the buyers get nervous. That is the whole comparison, and the bond market drew the other side of it in public. At the time of this writing, bitcoin was $84,377.