Wednesday, May 27, 2009

Wednesday's Treasury Auction Results


4-week bill: $35 billion

  • Primary Dealer: $23.04 billion
  • Direct Bidder: $2.53 billion
  • Indirect Bidder: 8.35 billion
  • Bid to cover ratio: 3.24
5-year note: $35 billion

  • Primary Dealer: $18.47 billion
  • Direct Bidder: $977 million
  • Indirect Bidder: $15.44 billion
  • Bid to cover ratio: 2.32

The result of 5-year note auction seems to have triggered a sudden downturn in the stock market. Dow Jones Industrial Average went from 8,449 (1:33pm EST) to 8,358 (2:09pm EST). It is also causing the yields on 10-year note and 30-year bond to rise significantly.

Bid to cover ratio was above average (the average is 2.27), indirect bidder was 44% (the average is 27.9%). So what didn't they like? Maybe these?

  • Interest Rate: 2-1/4%
  • High Yield: 2.310%
  • Allotted at High: 44.97%

Maybe all foreign buyers (indirect bidder) wanted higher yield.

Gold went down on the news. That's peculiar. (Gold bullion dealers happen to be Treasury primary dealers.)

Mr. Treasury Secretary, are you still standing by your word that the rising Treasury yields are the sign that things are improving?


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