Yesterday's 20 Year TIP and today's 2 Year auctions have not gone very well..., not enough indirect/foreign government buying...
_____________
Jan. 26 (Bloomberg) -- U.S. two-year Treasury note yields held near their highest since 2002 after the government's auction of $24 billion of the securities drew less demand from a group of bidders that includes foreign central banks.
The sale came a week before the Federal Reserve is forecast to raise its target interest rate for overnight loans between banks to 2.5 percent from 2.25 percent. The yield on the notes was 3.245 percent, the highest at an auction of such securities since 2002.
``The Fed has been very aggressive in telling people they're going to keep raising rates, and 3 1/4 doesn't reflect enough,'' said Scott Gewirtz, co-head of U.S. Treasury trading at Deutsche Bank Securities Inc. in New York. ``Yields are low in general given what the Fed keeps saying.''
The current two-year note, a 3 percent issue maturing in December 2006, fell about 1/32, or 31 cents per $1,000 face amount, to 99 9/16 as of 1:15 p.m. in New York, according to bond broker Cantor Fitzgerald LP. The yield rose almost three basis points, or 0.03 percentage point, to 3.24 percent. The yield reached a 2 1/2-year high of 3.27 percent on Jan. 19, and is up from last year's low of 1.44 percent in March.
For every $1 sold, there were $2.01 worth of bids, compared with $2.61 at December's auction. For the past 12 sales, the bid- to-cover ratio, which gauges demand by comparing the volume of bids with the amount of securities offered for sale, averaged $2.25.
Indirect Bidders
Indirect bidders, the class of investors that includes foreign central banks, bought 29.7 percent of the securities, compared with 34 percent in December. Since the Treasury began publishing bidder participation figures in May 2003, indirect bidder awards in two-year note auctions have ranged from 27.6 percent to 61.4 percent, and averaged 42.5 percent. |
