Results of the Treasury's $6 billion auction of 20-year TIPS were stronger
than for past 20-year TIPS auctions, of which there have been only six, with
the first dating back to July 2004.
The auction yield was 2.60%, a bit better than expectations for a range of between 2.62% and 2.63%. The bid/cover ratio was 2.23, just a hair below the record high of 2.24 set last July and above the six-auction average of 1.75, indicating a high level of interest, although the figure is a bit inflated by the small size of the auction (the average size of the six prior auctions was $8.3 billion).
The tally of indirect bidders was 62%, indicating that a large portion of today's auction went to end users, not to dealers. The upshot of these auction results is that they indicate liquidity preferences have not materially changed. If they had, investors would shun TIPS, which are much less liquid than conventional Treasuries.
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Tony Crescenzi Blog Oil, Gasoline Longs Are Large 7/24/2007 10:57 AM EDT While not quite at their previous record levels, speculation is still quite strong.
Tony Crescenzi Blog Chain-Store Sales Weaker 7/24/2007 9:09 AM EDT The latest data are down from the previous week, but still better than the second quarter.
Tony Crescenzi Blog Credit Markets Stable, No Gain 7/23/2007 3:04 PM EDT The market have swung a bit, but ultimately remain unchanged.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market,
first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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