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Strategies & Market Trends : January Effect 2003 -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (366)	4/22/2003 2:46:34 PM
From: Londo	Read Replies (2) \| Respond to of 666

About the bond supply.. marketwatch.com Treasury announced Monday it would sell $27 billion of 2-year notes Wednesday, a size that matches the record set each month over nearly the past year as the government has upped its borrowing to cover spending and compensate for skimpier tax revenues. Bond market participants were also bracing for what some expect to be a record influx of 3-, 5- and 10-year maturities for the government's quarterly refunding operations to be detailed next week. The sole economic releases Tuesday are reports on chain-store sales.Treasury announced Monday it would sell $27 billion of 2-year notes Wednesday, a size that matches the record set each month over nearly the past year as the government has upped its borrowing to cover spending and compensate for skimpier tax revenues. Bond market participants were also bracing for what some expect to be a record influx of 3-, 5- and 10-year maturities for the government's quarterly refunding operations to be detailed next week. I think this is a perfect case of "sell the rumour, buy the news" - i.e. when it's finally time for auction time, participants are probably going to be surprise at the subscription rate. Although the way that the stock market is going, I just wonder how much capital is going to get diverted in that direction. If the subscription rate really falters, then it might be a good short. Either way, the bond market is going to be seriously volatile the next week. I don't think the size of the issue is going to be the surprise, but the information that will have to be priced in after the event is the subscription rate. Is there a good website for that sort of information? Also, I think it's getting obvious that although the Feds can't reduce short term interest rates any further (1.25% is probably going to be 'it' for most intents and purposes), they need to target the long-term yield. The first step in reducing the long-term yield was of course getting rid of the 30-year auctions. The next step in the operation is to shift the structure of the country's debt so that way they're issuing more short term maturity notes and less 10 year notes. In fact, if the fed got out in the market and started doing this manually (i.e. buying back 30 year notes and selling 10 years while keeping the yield differential to something acceptable) it wouldn't surprise me a bit. *The sole economic releases Tuesday are reports on chain-store sales.* Less for me to worry about thankfully. If there was an inflation release or jobs report or something tomorrow, it would have made things tricky.