30 year bond auction was light
By Peter Boockvar - November 12th, 2009, 1:24PM
The record $16b 30 year bond auction was light as the yield was a few bps above where the when issued was trading and the bid to cover at 2.26 was the weakest since May and below the ‘09 average of 2.43. Indirect bidders totaled 44% which is about in line with the ‘09 average. Going out 30 years to collect a nominal yield of 4.47% with no inflation protection is taking huge faith that the return will compare favorably to other asset classes with the backdrop of the current impact of a weaker US$, higher gold, rising inflation expectations and worsening government finances. The long bond is lower following the auction but was on the weak side just ahead of it.
November 12th, 2009 at 3:50 pm
Is there a way to find out who the buyers were?
November 12th, 2009 at 6:07 pm
This was the long bond. People getting more nervous about trusting us further out. That doesn’t bode well for us…
@ Pete
They lump them into indirect or direct bidders. My bet is, the largest buyers were financial institutions because they’re sitting on a pile of reserves. But I’m sure if you’re that interested, you could dig around and find out that info. If you have the patience.
November 13th, 2009 at 8:52 am
[...] investors wearying of government bonds? To raise stimulus funds, the US sold $81bn of debt this week, including record amounts of three- [...]
November 13th, 2009 at 8:57 pm
[...] 30 year bond auction was light: The record $16b 30 year bond auction was light as the yield was a few bps above where the when issued was trading and the bid to cover at 2.26 was the weakest since May and below the ‘09 average of 2.43. Indirect bidders totaled 44% which is about in line with the ‘09 average. [...]