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No Weakness Here : 7 Year Auction Stops Through, Highest Bid To Cover Since November
If the last two auctions, the 2 and 5 Year, were both wildly disappointing and confirmed what we had said that foreign central banks are no longer a strong demand presence in the short-end, today's 7 Year was a welcome surprise to anyone who is holding on to Treasury longs. Moments ago the 7 Year When Issued was trading at 1.939%, so when the 1.930% high yield print hit the tape, longs everywhere collectively exhaled in approval observing the 0.9 bps stop through. The internals were likewise strong, with the Bid to Cover of 2.526 highest since November's 2.635, as Indirects kept their take down flat, absorbing 50.84% of the auction as Directs took down 14.15%, the highest since January, leaving 35.00% to the Dealers.
And while this may be good news for the time being, the question is just how much more does China have to sell on the long-end, which is where the battering in the past week has been most profound. Expect much more fireworks next week when the 10Y and 30Y auctions are set to take place.
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Suure
Because nothing says "risk-off" better than loaning the US government more money at essentially a zero return.
For long periods of time. Idiots now rule the earth......
dont know how the hell you could get a down vote on that Id use the term criminally insane though
I have my own personal down voters.... ;-)
So the US buys the same debt they issue? Alright!
well somebody has to pay the fed back for putting all those used condoms,feminine hygiene products,used bandaids and other financial fecal matter during the GFC on their balance sheets.
but but but China is dumping treasuries!!! how is this possible!!
I hear your sarcasm "IamAMan" and agree with your implied point. But ask yourself why the author then says, "Expect much more fireworks next week when the 10Y and 30Y auctions are set to take place.". If we all know the Fed, et al. are the buyers, why should we expect fireworks? It should only be orderly, right?
There will be no more bond vigilantes until the pussified average American says, "No more!" And is willing to step into the maw to make it stop.
Prober may be right.
I learned a long time ago that if you have a divide by zero in the equation somewhere -- even the Pythagorean theorem is easily solved.
Serious question for anyone please.
Must China sell US Treasuries at PAR or, can they discount them?