The Banking and Strategy Initiative

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A busy fortnight: Treasury's slam dunk on 7 auctions

Department of Treasury Seal

Image by woodleywonderworks via Flickr


Banks are only too eager as the US treasury has 7 nearly back to back auctions in the period leading to Christmas till next Monday as most banks do not expect trouble in Europe ( but there is no ECB to help) Despite the tightly packed schedule still being attractive to investors, including a $25 bln 3 year auction today a $30 bln 30 year bond auction Wednesday and a very rare nowadays Inflation securities (5 year TIPS ) auction on Thursday will be followed by 2 year notes on Monday and two others next week.

Usually auctions are notified on Thursdays for next Monday for regular 3 month & 6 month T Bills which will also go on simultaneously. On the longer Treasuries from 2 yr to 30 yr denominations, the 21 primary dealers are expected to bid higher to ensure that there is a lesser probability of picking up bonds when there is no demand. However a higher yield on the bonds would also signify that the economy has perked up as the yields are a leading indicator of FOMC moves coming up and as such the amount of $78 bln this month is unlikely to cause a scare in the banks sitting pretty

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This entry was posted on December 12, 2011 by in Amitonomics, Banking, US and tagged , , , .


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