The record 5 yr $42b auction was excellent as the yield was 3-4 bps below the when issued and the bid to cover at 2.81 was the best since Sept ’07 and well above the average seen this year of 2.28. Indirect bidders totaled a solid 60.9%, above the average of 51.1% over the past 5. Whether its due to year end buying and prettying up of balance sheets, or still economic concerns, or still apparent risk aversion, or bank buying taking advantage of free money from the Fed, or foreign central bank FX intervention of buying US$s to halt the rise in their respective currency or lack of belief in inflation or confidence that the Fed will remain easy for much longer, the US Treasury has been able to finance every growing deficits with continued relative ease. Tim Geithner can continue to say “Wait’ll Otis (China and others) Sees Us, He loves Us” before every auction, until he can’t.

Category: MacroNotes

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

2 Responses to “Great 5 year note auction, they still love us”

  1. Pat G. says:

    “or bank buying taking advantage of free money from the Fed”. Yep, you got to admit that the Fed has come up with an ingenious way to monetize more debt.

    “60.9%, above the average of 51.1% over the past 5.” That’s a 9.2% difference in the lack of direct bidders (foreign central banks).

    You can look at these numbers in different ways but the bottom line is; no country has ever succeeded in spending its way (debasing the currency) to prosperity.

  2. [...] Record US 42bn 2-year bond issue still met with strong demand – Big Picture [...]