Strength In Treasury Notes
According to the Department of the Treasury's Public Debt News, the U.S. had an extremely strong 10-year auction, the strength of which emphasizes the positioning of U.S. Treasury notes as a bastion of financial stability in a world of economic uncertainty. With seemingly no end in sight to the European sovereign debt crisis and slowing growth in China, it's understandable that many investors are fleeing to U.S. Treasury notes.
The strength of the auction was underscored by the fact that the reopened 10-year notes sold for 1.459%, a record low yield. In fact, if future inflation is factored in, investors who hold on to the 10-year notes may very well receive a negative yield! The Treasury raised $21B through this auction.
Moreover, this auction was interesting because a significant proportion of the auction was composed of direct bidders. Direct bidders (including domestic money managers) were responsible for 45.4% of the bidding while, in previous auctions, their involvement usually fluctuated around 17.2%.