In the Fed's weekly opening of its term securities lending facility, primary dealers sought more Treasuries relative to the amount offered by the Fed than at any time since the week ended April 17.
The Fed offered $25 billion of its Treasuries, which dealers could obtain by submitting so-called Schedule 1 collateral, which consists of all collateral eligible for tri-party repurchase agreements arranged by the Open Market Trading Desk (agency debt and agency MBS). Dealers sought $27.2 billion of securities, producing a bid/cover ratio of 1.09, the first cover ratio of greater than 1.0 since April 17. Attention now shifts to the data on the Fed's primary dealer credit facility, which will be released today at 4:30 p.m.
Most likely, today's auction reflects a financing issue of small magnitude and perhaps concern about the possibility of another setback in credit conditions, but given the renewed concerns about financial companies and the increase in swap rates and Libor, these indicators deserve more intense focus than has been the case for many weeks.
P.S. Will you be there when Cramer makes his next move?
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Tony Crescenzi Blog Currency Intervention Makes Sense 6/12/2008 12:23 PM EDT The time for intervention is when the dollar has advanced enough to crimp speculators.
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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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