Wednesday, March 9, 2011

Ten Year Note auction 3/2011

Todays auction was completed in strong action. Econoday reports "All readings on today's 10-year Treasury auction are strong. Coverage of 3.32 compares with a long-term average of 2.50 while the stop-out rate of 3.499 percent is nearly three basis points below the one o'clock bid. Buyside participation was strong, indicated by a smaller-than-average dealer takedown of 41 percent."

At the same time, Pimco's Total Return Fund is reported  by Reuters to have sold all its U.S. government-related securities, including U.S. Treasuries and agency debt. The article goes on that Bill Gross is saying there is going to be a loss of bids for treasuries, raising yields, if the Fed ends QE2 at the end of June. The posturing here is clear. Bill Gross is voting for more QE2.