Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20
Facebook (FB) AI Mega-trend Tech Stocks Investing 2020 - 10th Feb 20
The US Constitution IS the Crisis - 10th Feb 20
Stock Market Correction Continues - 10th Feb 20
Useful Tips for Becoming a Better Man - 10th Feb 20
Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020? Part1 - 9th Feb 20
Could Silver Break-out like it did in 2011? - 9th Feb 20
The End of the Global Economy - 9th Feb 20
Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You - 9th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

U.S. Treasury Bond Market Auctions Results This Week

Interest-Rates / US Bonds Feb 26, 2010 - 01:36 AM GMT

By: Fresbee


Best Financial Markets Analysis ArticleWe hereby summarise the bond auctions this week which held another record breaking amount as nearly 150 billion were auctioned between 3 months to 7 year duration. The overall Bid/cover has been very healthy at 2.9 and even with Chinese spat going on, Indirect bidders have been significant with their presence albeit at a lower level of participation.

7 year Auctions:
Results were very strong for the Treasury’s monthly 7-year note auction where the large $32 billion size failed to water down coverage which came in at 2.98 for the highest rate since the coupon’s February 2009 launch. In another sign of strength, the auction stopped out at 3.078 percent, about 1/2 basis point below the 1:00 bid. Dealers ended up buying a lot of the issue, taking down 45 percent. Indirect bidding was light, at a 40 percent takedown, and is only partially offset by a record direct takedown of 17 percent. The high direct takedowns in recent auctions, including this one, are likely to increase talk that buyside accounts are bypassing dealers. Treasuries showed little reaction to the results which cap another weak of heavy, and successful, Treasury borrowing.

The bid/cover ratio curve seems to be indicating very high demand led by Primary dealer network. Indirect Bidders were lower as a class of bidders compared to last auction at 40%.

The offerred amount continues to be at record levels.

5 Year Auctions:
Non-dealer bidding was on the light side at the 5-year Treasury auction, a contrast to yesterday’s strongly bid 2-year auction. Bidding was sloppy for today’s $32 billion auction, which stopped out at 2.395 percent for a 2 basis point tail. Indirect bidders took down 40 percent of the auction vs. a 50 percent average. The drop-off was offset in part by an increase in the direct takedown to a double-than-average 13 percent. But dealers were today’s story, taking 47 percent of the auction vs. 40 percent in January’s offering. Treasuries showed no significant reaction to the results. The Treasury will auction $32 billion of 7-year notes tomorrow.

The offered amount has been continuously rising with latest offering at a record shattering $41 billion. The 5 year bonds account for nearly 400-500 billion of bonds auctioned annually. To the obvious question whether there will be demand for such massive amounts of bonds, my personal take is that as long as currency imbalances remain, bond demand will be sludge along.

The results have been captured above with bid/cover rising at a fast clip. The bid/cover rise has been coinciding with the rise in direct bidders which definitely is not a healthy sign.

Others/Short duration:

After the disaster last auction seen in 30 Year and 10 Year bonds, todays results are attached

  • 3 Month Auction

Primary bidders took 43%, Direct bidders took 17% while Indirect Bidders took a healthy looking 40% of the $26.3 Bn auctioned. The yield went 0.1% and bid/cover ratio of 4.04 which can be considered a very strong auction.

  • 6 month Auction

Primary bidders took 47%, Direct bidders took 19% while Indirect Bidders took a cautious 33% of the $23.9 Bn auctioned. The bid/cover closed at 4.29 which kept a strong lid on the yield at 0.19%

  • 30 Year TIPS

Primary bidders took 51%, Direct bidders took 6% while Indirect Bidders took a cautious 42% of the $7.9 Bn auctioned. The bid/cover closed at 2.45 while yield remained at 2.229%.The decline in direct bidders is source for some comfort but we are still concerned with the losing bid/cover ratio.

All in all todays auctioned TIPS and bonds were far more healthier than seen in recent times.


We continue to be neutral to bearish on US bond auctions but no where as bearish as some others who have called for a complete collapse of the bond markets. We believe as long as currency imbalances remain, US bond market will have demand and avoid “continuous” collapse which is a way to say that there may be occasional speed bumps but over a longer period of time, FED should be able to manage the sales till H1 2010 post which we need to analyse the developing situation.

To sum up: One thing is for sure, not everything is well with the bond auctions into 2010 but it is still too early to call for a collapse of bond markets.

Our last analysis on Bond markets indicated that we are in a structural decline in appetite of US treasuries. Read Here


Source for data: Treasury Direct, FED, Haver Analytics, Reuters Knowledge, Bloomberg


Fresbee is Editor at Investing Contrarian. He has over 5 year experience working with a leading Hedge fund and Private Equity fund based out of Zurich. He now writes for Investing Contrarian analyzing the emerging new world order.

© 2010 Copyright Fresbee - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules