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Yield For Today's $35 Billion 2 Year Auction Joins Rest Of Curve In Rising
After recent 7, 10 and 30 Year auctions all came in at a higher yield than prior, today it was the 2 Year's turn. Today's $35 billion 2 Year bond came at a 0.52% high yield, substantially wider than the previous 0.40% which was an all time record. And despite the rise in the rate, the Bid to Cover still came at a near all time high of 3.60, lower only compared to September's 3.78 and October 2009's 3.63%. Direct Bidders were 14.39%, in line with the last 12 auction average, the same for the Indirect and PD bid, which were 38.26% and 47.41%. Of course, with the Fed about to monetize up to $8 billion of 2 years on the 29th, one can bet that CUSIP 912828PV6 will be not only on the inclusion list, but one of the securities monetized.
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It's seems everyone wants to sell Treasuries to the Fed!
And even with $8+ billion of POMO, stocks are still down 130.
@12:30 CDT Dow surges up on little volume!
See, that Ireland thing is already forgotten.
Oh and what is that about lead found in drinking glasses, I need to get some drinking glasses to go with my reading and sun glasses.
Lead found in drinking glasses? How about the sodium flouride found in the drinking water!
The Chinese are effectively sterilising the POMO with their reserve rate increase and action of PBoC bills in Hong Kong. The amount of leverage extended from August when QE2 was announced and this month is probably vastly in excess of the $600bn authorised by the Fed. Hence, liquidity is contracting, margin calls are destabilising those overexposed, and markets must sell down. Nasty.
Ireland is irrelevant, mostly. It is just being punished for being the only state brave enough to follow the Norwegian model and force the bondholders and equity holders to take losses.
Good points, someone should force the issue that banks, goverments and consumers need a good workout. Not out right default, but adjustments to current income levels.
Inflating assets is going to be a drag on real investment capital for a LONG time.
Not to mention the over leveraged and people who extended credit to those not worthy are rewarded. Savers and innovators are punished. WRONG
Short term pain or long drawn out pain....that is the question.
Hasek time? wouldn't expect any miracles..but am looking for a sideways day. Anything the fed can do back channel wise, the chinese can do also. not alot of effort, not alot of fan fare. quiet and with precision. ' nana ben must be so pissed at sack right now. channeling the 3 stooges....sack, tim, ben: "why you!" <bop>, "schmart guy huh?" <eye poke gag>, "nyuk nyuk nyuk"
Bernanke churning his paddles furiously creating lots of frothy foam, but creating no direction in the whirlpool he finds himself in.
"good lovin' gone bad...yeah, yeah, yeah!"
time to raise QE2 to eleventy hundred billion
So, just to get this right:
Low bid-to-cover ratio = Green Stick-save ramp
High bid-to-cover ratio = Muddling whimper, red candle ensues
Or is it entirely uncorrelated?