Five Year Result

June 24th, 2009 1:09 pm | by John Jansen |

Foreigners are loving our securities. I performed a  quick long hand division (thank you to Sister Mary Consolata ) and it appears that foreign central banks bought 62 percent of this issue.

The auction also came 2 basis points through where the issue was trading in the secondary market at bidding time.

The average yield was 2.70 percent.

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  1. 20 Responses to “Five Year Result”

  2. By Jay on Jun 24, 2009 | Reply

    Foreigners must have really under bid the primary dealers. Only 20% of primary dealer’s tenders were accepted.

    Now the question is how much risk appetite do foreigners have for 7 and 10-year notes.

  3. By Bman on Jun 24, 2009 | Reply

    As much as I have for eggplant.

  4. By Bob on Jun 24, 2009 | Reply

    Bloomberg reported that Treasury just changed the definition of indirect bidders to anyone other than a primary dealer. Are you sure those bids were really foreign central banks??

  5. By Alex on Jun 24, 2009 | Reply

    This is what it says on the results pdf:

    (Indirect Bidder) 8. Customers placing competitive bids through a direct submitter, including Foreign and International Monetary Authorities placing bids through the Federal Reserve Bank of New York.

  6. By Bman on Jun 24, 2009 | Reply

    I have suggested that in the past. The release says Indirect bidders are “customers placing competitive bids through a direct submitter..”

  7. By SD on Jun 24, 2009 | Reply

    Does it matter if the indirect bidders were foreign central banks or players of domestic provenance? Isn’t it sufficient that at a certain level, there is good demand for the US paper?

    I would be obliged, if somebody would walk me through the implications of the buyer being someone other than the foreigners.

    Thanks in advance.

  8. By Michael on Jun 24, 2009 | Reply

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  9. By steve on Jun 24, 2009 | Reply

    I wonder how much of this is Caribbean and London, might as well be Turbo Timmy buying these? I wonder how many $US currency swaps are being used to buy these a well? Inquiring minds would like to know.

  10. By Kevin Mackey on Jun 24, 2009 | Reply

    Any coincidence with the ECB move earlier in the day?

  11. By Tyler K on Jun 24, 2009 | Reply

    I think these guys are going to be richly rewarded.

    - in three minutes (!) we have the FOMC. I suspect pro Treasury pronouncement
    - 8:30AM Jobs and final GDP; I’ll go on a limb and say unexpected increase in initial claims, minor downward revision in GDP figures; pro T’s
    - 11AM buyback; pro T’s
    - 1PM 7yr … and as much as I feel that these guys are ane ugly duckling, I think the recent news and auction results will likely see this one go off without much noise either.

  12. By Tyler K on Jun 24, 2009 | Reply

    …then again, I could be wrong…

  13. By Chicken on Jun 24, 2009 | Reply

    Just keep the Gutenberg well oiled and you can fund the US government for eternity. Make sure there’s enough disposable “income” to buy candy and popcorn for the kids.

  14. By Alex on Jun 24, 2009 | Reply

    We want a stronger dollar?

    The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

  15. By Stuart on Jun 24, 2009 | Reply

    No doubt at all because of this well timed announcement. No collusion going on here at all…So with over 1100 European banks receiving north of $600 billion worth of funds, c’mon no one should be surprised it was well bid by “foreigners”. ECB rides in like a white knight!!! TG/BB to JCT, we luv you my little escargot!

    June 24 (Bloomberg) — The European Central Bank said it will lend banks 442 billion euros ($621 billion) for 12 months, the most it has ever allotted in an auction, as it steps up efforts to unblock credit markets in the 16-nation euro region.

    The Frankfurt-based ECB filled all bids in its first offer of 12-month loans to banks at the current benchmark interest rate of 1 percent. The 1,121 banks that participated will receive the funds tomorrow.

  16. By Macro on Jun 24, 2009 | Reply

    Is it really likely that other country’s central banks were falling over themselves to buy US T’s? I cant think of a single country that wouldn’t be in hanged by is people for investing in that type of risk right now….I think we will find out soon that the reason the US changed the rules to allow anonymous bidding ‘Indirect Bidders’ is to allow US to self bid to ensure that their auctions don’t fail with no bids at all which is the most likely outcome now.

  17. By John Jansen on Jun 24, 2009 | Reply

    How does one self bid?

  18. By Macro on Jun 24, 2009 | Reply

    It is like letting a home owner call out bids during the auction for his own house on behalf of secret buyers who want to stay anonymous. Indirect Bidders are defined by the Dept of Treasury as “Foreign and International Monetary Authorities placing bids through the Federal Reserve Bank of New York.” Thus the US Fed Reserve was the one bidding so enthusiastically for US Treasury dollars yesterday…who do they think they are fooling?

  19. By John Jansen on Jun 24, 2009 | Reply

    The auction result included an entry which indicates that SOMA (System Open market Account) purchased just over $ 1billion of these bad boys. Look for the SOMA entry. You are suggesting a grassy knoll theory that they stepped in and bought more as an indirect bidder. Not likely my friend.

  20. By Stuart on Jun 24, 2009 | Reply

    Given all that we are finding out of backroom dealings, collusion at mindnumbing levels by Govt regulators/officials at all levels, market intervention tactics, blatant outright lying, …. after all that, to preclude the possibility or dismiss out of hands that the Fed would would not stoop to arranging some alternate means of financing under the table additional purchases above what it has formally announced or would not be capable of this, well I’ve got a bridge to sel you.

    I quite certain indirect bidders is more than just foreign central banks.
    “The second largest category of bidders has been drawing more attention recently. Indirect bidders include foreign central banks and official accounts that tender through the Federal Reserve Bank of New York, as well as any customer who submits through a primary dealer.”

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