http://futures.fxstreet.com/Futures...testnews&pv_noticia=1139336843-f05e0f08-37847 Treasury 3-year note auction "a relative bust" Tuesday, February 7, 2006 6:27:27 PM http://www.afxpress.com NEW YORK (AFX) - A Treasury Department auction of $21 billion in 3-year notes was "a relative bust," according to Action Economics. The sale produced a weak bid-to-cover - or bids rendered to bids accepted - ratio of 2.03. The percentage of indirect bidders, a closely watched category that includes foreign central banks, was just 22%, a record low. The aution produced a median yield of 4.571%. The auction was widely expected to have weak results due to very heavy corporate and government notes supply in early 2006 ================== Can this get any worse?..lol
a weak b/c is really no big deal if it was expected to be weak. You have to look at the big picture to see what the demand is for a series of auctions, if there are others that week, and what the demand is in aggregate for the quarter. You really won't see a strong reaction to weak auction results in terms of a sell off uness it was unexpected, and even that sometimes is knee-jerk. Demand lately is (as previously mentioned) further out the curve....
Watch for whether the auction tails above or below the noon WI bid. When the yield prints, dealers now whether they got the auction or not and know instantly if they have to use the futures mkt to hedge.
The idea is always, why aren't FCBs buying our Notes. Is this a lull or an actual change in sentiment. Since 03, is their buying that has kept the rates low. This time around, I think I read that it was due to the large supply coming this whole week. and that's why many FCBs passed on the 3yr sale. another site for bondheads: http://cantorviewpoint.com/ if anything, its a good site for info. --RS
Gee, the Cantor Viewpoint pays Kudlow for his opinion. How did this guy every get back on the street after his cocaine, liquor, and prostitute addictions? Well, I guess the answer is that he offered some to top Wall Street officials.