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Thursday, November 10, 2011

Ten Year US Auction Yesterday Was Light

Update: The 30-year auction did not go well. See WSJ. Bloomberg economic calendar summed it up this way:
Weak are the results of the monthly 30-year bond auction where coverage of 2.40 compares with 2.94 and 2.85 in the prior two auctions. The award rate of 3.199 percent is nearly four basis points higher than expected in what is a significant sign of weakness. Dealers were awarded 56 percent of the $16 billion auction which is a sizable share that points to limited participation from long-term investors. Demand for Treasuries is falling in reaction to the results.
The thing is, three year bonds did great this week - the Bid/Cover ratio was over 3.40, which is just huge. The yield was 0.379%. Dealers only took 41%.

It certainly looks like investors are getting worried about the future, given no action in Congress and the spectacle of several unfortunate demo projects of the effects of jacking up public debt. End update.

We'll have to see how the 30-year goes. The US debt clock is ticking away. Admittedly the current yields are pathetic, but the logical result of the Euro crisis is increased investor focus on governmental fiscal balances, and the US doesn't exactly shine in that area.

I'm dealing with a family medical emergency, which hopefully will have a good outcome. The Chief is okay and I am okay, but blogging is limited.

This is the big good news out of Italy:
Italy raised 5 billion euros by selling 366-day bills at an average yield of 6.087 percent, the highest since September 1997.
Mr. Market is worried about the near term!
10 year graph.
2 year graph.

These things keel over quite quickly, and the US is due within a couple of years to get in the danger zone.

In the meantime refineries are ramping back production in a big way. I think NFIB's predictive power will hold true.

We'll hold down the fort till you get back. Hope everything goes well.
Thanks for the heads-up on the bond market. This is what I've been dreading the last three years.

Good luck with your medical issue.
It means nothing. That just happens. Sometimes mine will be heavy then so light that I think it's over an then extremely heavy again. You never no so yeah.
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