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binve (< 20)

Treasury pays most since August to sell 3-yr. debt



April 07, 2010 – Comments (1)

Like I have made the case for here: What the Bond Market is Trying to Tell the Stock Market: A Look at the Yield Curve and Expectations -, I think that not only the long end of the of yield curve will rise, but more importantly the yield curve will continue to steepen (spreads will increase between long term debt vs short term debt). And like my post above shows, this is not bullish for equities. It doesn't portend a top immediately, but it does portend one soon (in a few months I think), And if this behavior goes unchecked (i.e. the bond market starts to buy the recovery story. The Fed *DOES NOT CONTROL LONG TERM RATES* - THE MARKET DOES) this will be a very important top for equities. In an evironment where money at the macro scale (the bond market) stays in short term debt (short end of the yield curve), the environment says big money is not betting on long term growth (or the risk/reward is not warranted = sharply higher yields on the long end of the curve vs. the short end = a steep and steeping curve).

Treasury pays most since August to sell 3-yr. debt
April 6, 2010, 1:11 p.m. EDT

NEW YORK (MarketWatch) -- The Treasury Department sold $40 billion in 3-year notes on Tuesday at a yield of 1.776%, the highest since August. Bidders offered to buy 3.10 times the amount of debt sold, compared to 2.98 times at the last four monthly sales of 3-year notes, all for the same amount. Indirect bidders, a group of investors that includes foreign central banks, bought 52.2% of the sale, the highest since December and versus 50.5% on average. Direct bidders which include domestic money managers purchased another 10.7%, compared to an average of 11.7%. The broader Treasury market remained higher after the auction as investors were drawn in by the highest yields seen in months. Yields on 10-year notes /quotes/comstock/31*!ust10y  (UST10Y  3.94, -0.01, -0.18%) , which move inversely to prices, fell 3 basis points to 3.97%, after touching the highest since June on Monday.

1 Comments – Post Your Own

#1) On April 07, 2010 at 12:46 PM, binve (< 20) wrote:

Crap, this line should say:

And if this behavior goes unchecked (i.e. the bond market doesn't start to buy the recovery story. ....

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