Ahead of Thursday’s FOMC meeting where one of the possible outcomes is a push into 2015 for the time frame of how low they want to keep the fed funds rate, the 3 yr note auction just announced saw the best bid to cover dating back to 1993 at 3.94. Also, direct and indirect bidders took the highest percentage of the auction since Nov at a touch above 50%. On the possible 2015 fed funds target, in practice its worthless crystal ball information from the Fed as so much can change of course in between. It is thus just the Fed’s attempt at jawboning the yield curve and trying at least to continue to pin the short end to virtually zero.
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