No debt deal in Washington, DC, who cares, give me my 2 yr US Treasury notes backed by the full faith and credit of the US government! Today’s bid to cover of 4.07 for $35b of notes was the highest seen since at least 1992 that I see records on. That is also well above the 12 month average of 3.39. Direct and indirect bidders took the most since Oct ’10. Flight to cash equivalents is of course the main driver, particularly with the European interbank lending markets getting more and more expensive by the day and the economic fallout that follows. With no change in the spending trajectories of the long term drivers of US debt, that being medicare, medicaid and social security, markets will eventually get to us but for now, the focus remains Europe.
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