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To: Raymond Duray who wrote (43797)	12/22/2003 6:07:48 PM
From: Kailash	Read Replies (1) \| Respond to of 74559

Great work! This looks like it's worth monitoring for more than the bid-to-cover ratio. If the average yield is rising in spite of the Fed keeping rates constant, that suggests a limit to their influence on long-term interest rates. Since the government must necessarily borrow money, they will sell notes no matter what, so I don't see any reason we would get undersubscription. The vast majority of the bids are competitive, so the Treasury is simply selling debt at the lowest interest rate it can get. If the US treasury were unable to find lenders at any price, we'd sure be in a pickle! The relevant variable would rather be the difference between the official short term feds rate and the rate the treasury has to pay. That figure should be trending up -- is it? BTW we should also monitor the 10-year notes at publicdebt.treas.gov Cheers, Kailash

To: Raymond Duray who wrote (43797)	12/22/2003 6:59:26 PM
From: Raymond Duray	Read Replies (1) \| Respond to of 74559

U.S. TREASURY BONDS COVER RATIO ANALYSIS: 10 Year Notes -- CY 2003 Data: publicdebt.treas.gov Amounts Tendered and Accepted (in Billions, rounded down) Date: Tendered: Accepted: Cover Yield: YY_MM Ratio: 03 12 $21 $11 1.9:1 4.36% 03 11 32 16 2.0:1 4.36% 03 10 n/a 03 09 28 12 2.3:1 3.34% 03 08 35 17 2.0:1 3.37% 03 07 n/a 03 06 n/a 03 05 21 17 1.2:1 3.70% 03 04 n/a 03 03 n/a 03 02 33 17 1.9:1 3.96% [Note: N/A = No Auction] $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ US Treasury 5 Year Notes: Amounts Tendered and Accepted (in Billions, rounded down) Date: Tendered: Accepted: Cover Yield: YY_MM Ratio: 03 12 $30 $15 2.0:1 3.38% 03 11 36 15 2.4:1 3.38% 03 10 35 15 2.3:1 3.12% 03 09 39 15 2.6:1 3.12% 03 08 44 17 2.5:1 3.30% 03 07 n/a 03 06 27 14 1.9:1 2.10% 03 05 37 17 2.1:1 2.68% 03 04 n/a 03 03 n/a 03 02 33 23 1.4:1 3.02%