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Indirect bidder

An auction bidder who submits through a primary dealer rather than directly; largely foreign central banks and asset managers, and a rough proxy for overseas demand.

The Treasury reports the auction split three ways: primary-dealer, direct bidders who bid in their own name, and indirect bidders who bid through a dealer. Indirects are dominated by foreign official accounts and large real-money funds.

A rising indirect share is read as strong end-user demand and is bullish for the security; a falling share means dealers are being left with inventory. The measure is imperfect because a large domestic manager bidding through a dealer is also counted as indirect.

Example: indirects take 71.5% of a 10-year auction against a six-auction average of 66.8%. Combined with a stop-through, that is a strong result, and the 10-year rallies 3 basis points in the minutes after.

Related: treasury-auction, primary-dealer, bid-to-cover, auction-tail

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