Chillin' out till it needs to be funded
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