“It makes you wonder who exactly is lining up out there to buy it.”
December 23rd, 2008As long as there are takers for this slop, the band plays on. I was worried that the situation in Japan would affect this auction. Nope.
Via: Bloomberg:
Two-year Treasury notes dropped for a second day as the government sold a record $38 billion of the securities at a higher yield than forecast.
While the 0.922 percent yield was the lowest on record since the Treasury began regular auctions of the securities in 1975, the average forecast in a Bloomberg survey of eight firms that bid on the sale was for a yield of 0.912 percent. The bid- to-cover ratio, a gauge of demand, was 2.13, compared with an average of 2.25 at the last six auctions. The government will sell a record $28 billion in five-year notes tomorrow.
“It’s a lot of paper,” said Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management in Milwaukee. “It makes you wonder who exactly is lining up out there to buy it.”
The two-year note yield increased six basis points, or 0.06 percentage point, to 0.82 percent at 4:08 p.m. in New York, according to BGCantor Market Data. It dropped to a record low of 0.60 percent on Dec. 17, from a peak this year of 3.11 percent on June 13. The price of the 1.25 percent security due in November 2010 fell 1/8, or $1.25 per $1,000 face amount, to 100 26/32.
The five-year note yield rose six basis points to 1.42 percent, and the 10-year yield was up four basis points, to 2.17 percent.
Treasuries fell earlier as a gauge of banks’ reluctance to lend slipped below 150 basis points for the first time since the collapse of Lehman Brothers Holdings Inc. in September amid speculation interest rates near zero and promises of more government cash will help thaw credit.
Indirect Bidders
Indirect bidders, a group that includes foreign central banks, bought 30.4 percent of the two-year notes sold, compared with 34.9 percent in the prior auction. Primary dealers bought 68.2 percent, compared with 63.7 in the last sale. Direct bidders purchased 1.4 percent.
