Wednesday, June 10, 2009

10-year Auction: This place can get a little rough

The 10-year auction was horrible. Non-fixed income people don't realize how big a miss 3bps is on a 10-year auction.

The ancillary stats indicate no foreign flee. Indirect bids were the second highest this year. So people will buy bonds, they just want more yield to do it.

Meanwhile, this story on Russia is worth watching. Can they really increase their IMF holdings, and if they do, does it matter? Here are two links to read.

Russia currently holds about $140 billion in U.S. debt. I understand none of that is in Agency holdings so I assume that's overwhelmingly Treasuries. China holds $768 billion.

Its counter-intuitive to me that the DXY is solidly higher while Treasuries sell off. I really think this sell-off has reached silly levels.


admin said...

kiss a wookie, beeeeyotch

In Debt We Trust said...

It wasn't just Russia. Brazil also made a statement about diversification yesterday and again today.

Bond vigilantes indeed.

Accrued Interest said...

Admin: Who's scruffy lookin'?

dimitry12 said...

I'm more of a supply and demand camp: the sell-off across the curve might be caused by expectation of end of FR Treasuries buying program. Thus dollar might actually even strengthen at the same time.

Nevertheless it's hard to argue looking at the auction result that demand still persists but requires higher yield.

Unsympathetic said...

AI, any analysis on the japanese nationals caught trying to enter Switzerland with $140B of US T's on their person?

That's Russia's entire T holdings..

Accrued Interest said...


Weren't they counterfiet?