"Following last week's stellar auctions, this week's issuance trio has started
off with a whimper. While Tim Geithner managed
to sell $35 billion in 2 year notes today at a near record low rate of
0.24%, the details were very unimpressive. Because not only did the Bid To Cover
decline from last month's record 4.07 to a modest 3.45, in line with the last 12
auction average, it was the precipitous drop in Indirect Bidding, aka foreign
interest, that was most notable: at just 21.65% this was the lowest
Indirect Take Down since February of 2008. Which means Dealers had to
take on a majority of the auction. Which they did at 63.66% of the total.
Naturally, this will not be a surprise to many: after all according to the
latest TIC data, Chinese
bond holdings tumbled in October to the lowest in a year, Russian holdings
collapsed, and courtesy of the Fed's weekly custodial
account updates, we know that foreigners have been selling tens of billions
in US paper in the past several weeks. Slowly, the US is becoming the same ponzi
scheme that it accuses Europe of being whereby Dealers buy up paper, and
immediately repo it back to the Fed and other conduits. In other words, once the
European repo market freeze crosses the Atlantic, then it will get very
interesting very fast..."
at http://www.zerohedge.com/news/2-year-bond-auction-sees-lowest-foreign-interest-february-2008
at http://www.zerohedge.com/news/2-year-bond-auction-sees-lowest-foreign-interest-february-2008
