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US auctions off 30 year bond at 2.170% vs WI level of 2.169%

US auctions off $16 billion of 30 year bonds

  • High yield 2.17% versus WI of 2.169%
  • Bid to cover 2.25x vs six-month average of 2.23x
  • Dealers took 22.94%. vs six-month average of 27.3%
  • Directs 18.5% vs six-month average of 18.8%
  • Indirects 58.5% vs six-month average of 67.2%
the US treasury completed its refunding by selling 16 billion of 30 year bonds at a high yield of 2.17%. That was slightly above the 2.169% level at the auction time. The bid to cover was near the six-month average. Dealers took a lower percentage than the average at 22.94% suggesting a distribution of the auction to nondealer participants.
Give the auction the C+ to B-

Prayer for the Day

Prayer for the day –

Our Ben,
Who art in heaven,
Hallowed Be-nanke,
Thy auctions come,
Thy Bill’s be done,
In Twos as they are in Sevens,
Give us this day our daily Fed,
And forgive us our Treasuries,
As we forgive those that default against us,
And lead us not into recession,
And deliver us from deflation,
For thine is the borrowing, the easing, and the printing,
For ever and ever.
Amen.

India 1854 Inverted Head Variety

The classic 1854 inverted head variety set a new world record yesterday at Spink. The stamp, part of the Vestey collection auctioned off on October 13th, 2010 brought in a record GBP 105,390. The stamp was cut to shape. Twenty seven copies of this world famous rarity are known, only 3 of these were cut square. Image is courtesy of Spink. Entire catalog can be downloaded from: http://www.spink.com/auctions/pdf/default.asp

$673 Billion In Commercial Paper Maturing Through July 16 As CP Rates Creep Higher

As an increasing number of analysts evaluate the impact of Europe’s rolling defaults and failed auctions on Europe’s liquidity and particularly its shadow liquidity system, best seen in rising European Commercial Paper rates, is it about time to take a look at our own back yard. According to the Federal Reserve there is $673 billion in Commercial Paper maturing in the next 6 weeks alone, of which the bulk, Non-ABL Tier 1 CP amounts to $328 billion, ABL CP totals $292 billion, and Non-ABL Tier 2 CP totals $34 billion. What is concerning is that just like in Europe, rates here in the US for the various tranches of Commercial Paper have started rising. And as this is arguably one of the biggest components of the US shadow liquidity system, it bears close watching, especially if spreads continue leaking wider as they have recently. One thing to keep in mind: the Fed’ CPFF emergency facility has now been retired, and any hitch in the CP market will necessitate another brand new involvement in broad liquidity provisioning by the Fed. Then again, just as in the Central Bank liquidity swap case, which was reactivated on a moment’s notice, we don’t see any problem with the Fed announcing the CPFF program going live with no notice.

The chart below shows a maturity distribution of various CP tranches over the next six weeks.

And the recent rates on the three key CP tranches can be seen in the chart below. All three are trading at their 2010 wide levels.