The 3 year note auction, the easiest of the big three this week because of its short maturity, was very good. The yield was about in line with expectations but the bid to cover of 2.89 is well above the average this year of 2.52 and the highest since Nov ’08. Indirect bidders totaled 62.5% which is above the prior two which reflected the new methodology of calculation. With many, particularly the Chinese, shifting to the shorter end of the curve from the longer end, today was an easy sale. The tough part though comes tomorrow when the 10 yr benchmark note auction takes place with the 30 yr following on Thursday. I must say that our country’s finances are in such a state of affairs that the biggest economy in the world has to now cross its fingers right before the published results of debt auctions.
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