Not a lot of action this week in the medium and longer-term US debt auctions. There was a 20-year bond auction on Wednesday. A relatively modest $16 billion was sold, small by recent auction size standards. The interest rate was 4.88%, a bit lower than in July and almost exactly what was expected. Demand was a slightly weak compared to recent auctions for this issue and foreign demand was low, but domestic buyers filled in. Then today $8 billion was sold in 30-year TIPS bonds. These have an auction interest rate component which is above the base tied to inflation measures. The auction component was 2.65%, slightly below expectations. Demand was pretty good, although again, foreign buyers were not as prominent. You should note that in the aftermarket, bond rates were generally up, notwithstanding the widespread agreement that the Federal Reserve will cut the interest rates it controls at its next meeting. Again, I believe buyers are more concerned about the US fiscal and debt situation and less concerned about what the Fed does.
