Demand at U.S. bill sales in middle of recent range

Discussion in 'Economics' started by Richardfx, Jul 9, 2012.

  1. Richardfx


    Sales of short-term U.S. Treasury bills on Monday were consistent with results of the last several months while euro zone bank-to-bank lending rates hit all-time lows after last week's interest rate cut by the European Central Bank.

    The Treasury sold $30 billion in three-month bills at a high rate of 0.090 percent, awarding 68.57 percent of the bids at the high.

    The ratio of bids received over those accepted was 4.58. That ratio, as well as the portion of the auction captured by various categories of bidders, was consistent with recent averages, said Thomas Simons, vice president and money market economist at Jefferies & Co. in New York.

    The $27 billion six-month Treasury bill auction went at a high rate of 0.145 percent, with 17.99 percent of the bids awarded at the high and a bid-to-cover ratio of 4.83.

    Dealers got 63.4 percent of the issue, in the middle of the recent range, Simons said.

    Meanwhile, the rate of interest, or repo rate, on general collateral (the broad class of Treasury securities) ended lower at 5 basis points on Friday and opened on Monday at 19 basis points, said Roseanne Briggen, an analyst at IFR, a unit of Thomson Reuters. This was still below where repo rates traded going into quarter-end and early in the third quarter.

    The repurchase market plays a role in the financing and hedging activities of primary dealers, the firms charged with underwriting U.S. Treasury auctions.

    The Treasury will sell three-year notes, as well as 10-year notes and 30-year bonds this week. The latter two sales are reopenings, when the Treasury sells more of an existing bond, increasing the amount of the issue outstanding.

    The 10-year Treasury notes and bonds remained "on special" on Monday - meaning the repo rate was below the rate on its related general collateral - as traders prepared for supply, Briggen said.

    NEW YORK, (Reuters)