Please Take My Money for a 1% Return Back

The 3 yr note auction was good as the yield as about in line with the when issued but the bid to cover of 3.29 is the best since August and above the 12 month avg of 3.16. The US Treasury is certainly getting the gift of 1% financing costs for three years. Dealers also took the least amount since Jan thus leaving more in investor hands. This auction will be followed by the important 10 yr tomorrow and 30 yr on Thursday and as we all know, every day that goes by is one day closer to the end of Fed buying. Treasuries have certainly traded great of late and its due to concerns with economic growth as we close the chapter on QE2 and a large crutch gets taken away that was so supportive mostly to asset prices beginning in late August.

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