The 30 year bond auction was solid as the yield at 4.238% was below expectations of 4.27-4.29%. Also, the bid to cover at 2.92 is the highest since the 30 year was reintroduced in Feb ’06 and well above the average over the past year of 2.32. Indirect bidders totaled 46.5%, slightly below the previous two auctions but overall the auction was great. This is great news in satisfying the needs of US government borrowing but still begs the question of why we are seeing such good demand at these yields in light of the expectations of growth that the stock market has and the poor action in the US$ and coincident rise in gold.
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