Zero Hedge reports on just about every auction of US debt, short and long-term. You can also track it directly at the US Treasury website. As readers know, I am currently obsessed with our debt disaster, which I think is far past the tipping point to being irrecoverable. So I watch these auctions carefully. The very short term ones, two years or less, haven’t been dreadful. Any longer maturity is a completely different story. And yesterday’s 5 year note auction was spectacularly bad. The amount was $61 billion which is staggering in itself. As I have been saying, it looks to me like supply and demand are the determining factors now in the rates on the longer-term instruments, not whatever the Federal Reserve tries to set rates at. And buyers just aren’t that interested in this product. The end yield was 4.055%, well above what the Treasury planned to sell them at. The bids to amount offered ratio was bad and dealers were left holding the bag on a large part of the auction. Trillions in new and rollover debt will be issued this year and we can expect more auctions like this one. (ZH Post)
