Record Auction next week: $81 bn
By Contrarian
Published: November 5, 2009
Something people seem to have ignored.
The US Treasury said on Wednesday that it will sell a record $81bn of government debt next week for a quarterly refunding and also introduce a 30-year inflation bond.
The size of the new debt sale was $2bn more than expected and the increase in the size of the November quarterly refunding was led by longer dated maturities.
Next week’s auction of $81bn in new debt by the Treasury will raise $42.5bn of new money after refunding $38.5bn in expiring maturities. The Treasury will sell $40bn three-year notes next Monday, followed by $25bn in 10-year notes on Tuesday and $16bn worth of 30-year bonds on Thursday.These are all record amounts for a refunding. A year ago, the Treasury sold $25bn in three-year notes, $20bn in 10-year notes and a $10bn 30-year bond. The Treasury said it will replace sales of its 20-year Treasury Inflation Protected Security (Tips), with a 30-year issue that will start next February, and will consult with dealers about increasing the schedule of Tips sales.
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There are 2 things that are worrying:
1. There doesnt seem to be an end to the auction process
2. FED is auctioning higher proportion of longer duration bonds
While people might argue about FED exit strategy, right now we are in a real muddle where FED is increasing its auction every week. Am surprised by the ability of the dollar to have taken so much debt weight but it is only a matter of time before something gives way……..This is unsustainable!!!
Tagged with: auction, debt, Dollar, Global Investo
