Wednesday, June 24, 2009

EconNews Roundup: Boneheads or Bondheads

The econ. environment continues to be rather quiet. The most interesting item of the day was the coverage of yesterday's Treasury auctions.

I will not single out any daily in particular, but the general reporting mood on those was positive, highlighting the (relatively) low rollover ratio of 80%.

What these gents are forgetting is that for any good there is demand as well as supply, and Treasuries are no exception. The bid-to-cover ratio was a mere 1.5, compared to 3 last month, for the benchmark. With the Treasury not getting attractive offers and low redemptions for the month, it is not much of a surprise that it ended with a low rollover ratio. The cash balance will easily handle the rest. The high redemption months of August and October will be key in this regard...

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