Five Year Note Auction

August 28th, 2008 12:18 pm | by John Jansen |

The Treasury will christen the Street with $22billion 5 year notes in about one hour. I think that this auction will go well also as did the batch of 2 year notes sold yesterday.The market trades awesome and in spite of the GDP revision to an above trend 3.3 percent and in spite of all the supply ,the 10 year note is only 4 basis points off its recent highs.

There is a huge index extension tomorrow and in my opinion the street will want paper on the shelf for that.

I also think that there is a meteorological factor at work here. I do not believe that traders will desire to carry short positions over a three day weekend when the hurricane can seriously damage energy production in the Gulf.

Against that background, prognosticating yield levels when trading resumes on Tuesday is more difficult than guessing the path of the hurricane.

Therefore, I suspect that the auction today will be well received and will trade well subsequent to the auction.

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  1. 2 Responses to “Five Year Note Auction”

  2. By Danny on Aug 28, 2008 | Reply

    NEW YORK, Aug 27 (Reuters) – U.S. government debt prices lost more ground on Thursday after data showed below-average demand at a $22 billion auction of new five-year Treasury notes.

    The price on five-year Treasury notes , which moves inversely to its yield, was down 12/32. The five-year yield was 3.10 percent, compared with 3.09 percent shortly before the auction results and 3.02 percent late Wednesday.

    The benchmark 10-year Treasuries’ price was 16/32 lower for a yield of 3.83 percent versus 3.82 percent right before the auction results. The 10-year yield ended at 3.77 percent late on Wednesday.

  3. By Danny on Aug 28, 2008 | Reply

    The Reuters news article shows Aug 27th; but it is from today Aug 28th after the auction.

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