7 yr note auction not good

By Peter Boockvar - March 25th, 2010, 1:16PM

Following the weak 5 yr auction yesterday and with the highest yield since mid Jan, the 7 yr auction was not good as the yield was 3-4 bps above the when issued and the bid to cover at 2.61 was the lowest since May ’09 and below the one year average of 2.67. The combined indirect and direct bidders were the lowest since May ’09 as dealers took down 50% of the auction. To repeat what I said yesterday, I don’t know if it was the healthcare bill and the budget/debt concerns associated with it, the enormous supply we face as a result, or the Fitch downgrade of Portugal, or a reaction to the creep up in LIBOR rates or a delayed reaction to the improving economy, however modest but something has changed this week in the US Treasury market and the cost of borrowing is going up as it is in Europe too.

PERMALINK
Category: MacroNotes.

Comments

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “7 yr note auction not good”

Fredex Says:
March 25th, 2010 at 1:34 pm
The return to savers is going up, too. It’s a matter of perspective.
franklin411 Says:
March 25th, 2010 at 4:18 pm
What debt concerns are associated with the health care bill? The teabaggers?

Health care is not only fully paid for, it even shaves $1 trillion off the deficit. Now if we let the Bush tax cuts for the rich expire and end major deployments in Iraq and Afghanistan, we can lop a good $3 trillion off of our budget problem.

That’s a good bit better than the period January 2001-January 2009, right?
powerpenguin Says:
March 26th, 2010 at 1:11 am
I think the real reason is China. They have been buying up treasuries for a while now but are stopping because the yuan will rise soon and they no longer want their money in US debt. I expect this will create a huge downward force on the price of treasury debt (upward force on yields).
It has seemed incredibly obvious to me since the currency debate started that this would result in a large devaluation of us debt. But nobody else has been talking about it and when I bring it up with others they just look at me funny and say “yeah maybe”. I feel like I’m taking crazy pills.
nancefinance Says:
March 26th, 2010 at 12:40 pm
Another factor? The Fed is no longer supporting the market.