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Highest Indirect Demand In Over 6 Years Leads To Surprisingly Strong 2 Year Auction
After today's Bill auction which once again saw rising yields at multi-month highs, supposedly due to Fed rate hike concerns, many were watching today's 2 Year auction carefully to see if rising rate pressures will put a dent in short-end maturities. The answer was a resounding no, when moments ago the Treasury sold $26 billion in 2 Year paper at a yield of just 0.69% (as a reminder the Fed's leaked staff projection forecast a FF rate of 1.26% at the end of 2016 or inside the maturity of this bond), pricing 0.8bps through the 0.698% When Issued, and suggesting there may have been another short squeeze into the auction.
The auction's internals were also solid, with the Bid to Cover jumping to 3.418 from 3.276 a month ago, the highest since March, and leaving Directs 17.88%, while the real action was for the Indirects who ended up holding 54.37%, or the most since June 2009.
It appears those foreign central banks just can't get enough of US Treasurys, even it means a money-losing yield (assuming the Fed does in fact hike rates), as long as they can get their hands on some of that all too scarce "money equivalent" collateral.
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The situation is, what competition do Treasury bonds have these days? High yield Greek bonds? Euro bonds backed by a currency that has turned to crap? Nothing.
it's either USTs or suck on merkel's NIRPle :yuck:
FWIW: I think this is probably the beginnings of another bond inversion. Investors are exiting other investments, and either buying USTs or they are putting them in Money Market accounts which are buying USTs.
I suspect the that the average ZH reader that has any capital (not invested in PMs or (yuck) bitcoin) is likely in cash, or perhaps USTs. Stocks and other investments are just too damn risky since the risks to a significant stock/bond correction, if not a full blown meltdown are very high.
That said, If any ZH readers have make any non PM/cash/bitcon investments, please share and briefly explain your reasoning -Thanks
"It appears those foreign central banks just can't get enough of US Treasurys..."
'BLICS'...?
How hard can this be? Banks create money out of thin air and loan it to the government and get bonds in return. Since all of the banks are tied together as one global entity they just toss around the football to whoever's turn it is to perform the magic trick. Poof!! new money!!
This is not newsworthy. It is a sham.
What difference does it make?
Tier 1 asset grab in the face of an upcoming liquidity crisis.
lol tier one assets.Sell gold buy dollars! Buy those worthless USTs! Sell all your gold, it's worthless!
;)
Yes we all know that in the two year time span interest rates will be higher....so I am to assume the people that bought today are not in for the 2 year term...maybe just two weeks or so....if this was a real market..the inrates would be more than the Fed is going to raise.....like 2.5% now...before the rate hike....I would think that is a better investment......you buy today at .6% and it goes to 1.5%..you lose?????
China is back in Belgium because they need to spend their excess reserves somehow and the stock market just ain't cutting it.
can anyone answer?????????
on my iPhone have the app everyone has "stocks" where u can input symbols, etc....i have the symbol for the cash 5y & the 10y T note (from CBOE oddly), have contacted CBOE, but they do not respond; contacted CME - they were surprised no symbol; SO - is anyone aware if there is a symbol for the cash 2y????