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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Terry Maloney who wrote (238240)	4/30/2003 8:10:55 AM
From: orkrious	Read Replies (3) \| Respond to of 436258

one reason for the clownbuck's weakness. from brian reynolds @ minyanville: Treasuries Walkup to the Treasury auction announcement 64.41.72.93 Today brings the much awaited announcement of the details of next month's quarterly Treasury auctions. I've been warning for nearly a year that this tax season would be ugly from a budget standpoint, but we have been getting recent hints that it would be even worse than I originally thought. Those hints were confirmed by this week's announcement that borrowing needs for this quarter would be a whopping $79 billion. That's significant because the April to June quarter often results in debt paydowns, not payups. The official quarterly borrowing estimate went from -$25 billion to +$75 billion, which appears to be another case of budget estimators, both federal and state, always seeming to underestimate capital gains revenue when it is rising, and underestimate it when it is falling. Today's announcement of auction sizes is anticipated to be $18 to $20 billion for each of the 3-year, 5-year and 10-year issues. Traders are fearing a higher number, so anything under a total of $65ish billion could actually lift the market. The 3-year note is being "unretired", as the Treasury can no longer finance the increase in the deficit through larger sales of Bills and 2-year notes. The question is what impact will all this borrowing have on bond yields. I've written that there is no correlation between bond yields and deficits. For example, in the wake of 9/11, I wrote that an increase in borrowing seemed to be in the cards, but the question was if demand would be able to offset that increased issuance. Demand turned out to more than offset it, and bond yields moved to generational lows despite the increased borrowing. Side note: The slide in mortgage refinancings slowed this week, as applications fell from 5103.9 to 5092. They had fallen from a record 9387 in mid-March as bond yields rose but, now that bond yields have been in a range for a few weeks, we are starting to see the brakes being applied to the slide. Mortgage purchase applications also saw a lessening of their recent slide, going from 359.9 to 356 after falling from over 400 a few weeks prior.