3 year note auction/where are the risk takers?

The 3 year note auction was solid as the yield was a touch more than 1 bps lower than where it was trading in the when issued market and the bid to cover at 3.02 was the best since Nov ’08 and well above the average in ’09 of 2.57. The level of indirect bidders totaled 54.2%, about the average in the prior three when the number was recalculated. With respect to fundraising, the US Treasury should do a high five but what does it say about the view on economic growth that there is such big demand for the 3 year note? Why isn’t this money going into riskier assets? Again, it’s another data point of the disconnect between the US Treasury market and that of equities.

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