-->Treasuries Lower Following 'Ugly' Auction
Thu Sep 9, 2004 02:12 PM ET


MORE

By Wayne Cole
NEW YORK (Reuters) - Treasuries prices turned lower in choppy trade on Thursday as an auction of U.S. government debt drew almost no private demand, leaving the dealer community holding a pile of paper.

"It was an extremely ugly auction. And that's something nobody wants to see, not the Street and certainly not Treasury given the amount of borrowing they have to do," said Sadakichi Robbins, head of global fixed-income trading at Bank Julius Baer.

The sale of $9 billion in reopened 10-year Treasury notes went at a high yield of 4.195 percent, well above expectations, and drew bids for only 2.12 times the amount on offer, down from August's 2.90 level.

The current 10-year note (US10YT=RR: Quote, Profile, Research) shed 6/32 in price, lifting its yield to 4.19 percent from 4.16 percent on Wednesday. In when-issued trading, yields on the new 10-year paper had hovered around 4.17 percent before the sale.

Indirect bidders, including customers of primary dealers and foreign central banks, picked up only 2.8 percent of the issue. That compares to 54 percent in the original sale of the notes and 38 percent at the last reopening

-->>... given the amount of borrowing they have to do...

Hört, hört!

-->
dieser Prozentsatz wird noch zu reden und zu schreiben geben!

Emerald

PS:
Die Renten-Fonds dürften/müssten damit die Zeichen an der Wand erkannt haben.

-->>>... given the amount of borrowing they have to do...
>Hört, hört!

Bill;
Just to elaborate on the rationale. Over the past number of auctions foreign buying has been anywhere from 38% to 54% of the winning bids - with 2 - 2.5 bid to covers. This time it clearly looks like they (foreigners) didn't show up at the auction at all - but we're told the bid to cover is still 2.12? So roughly 40% of the usual bidders didn't show up, the auction was figuratively horrible with a 4.195 average bid but the clowns want us to believe there were 2.12 in bids for every dollar auctioned. Well, not frikkin likely. This might in part explain the build in the repo pool - with dollars being added to help 'slop up' (monetize) excess debt. I personally, do not believe the auction results as published - IMO they are completely incredulous.
best,
Rob

-->Emerald,
die Wichtigkeit dieser Nachricht kann man nicht überschätzen, das Ende des Pyramidenspiels mit grünen Papierfetzen.
Manfred