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http://online.wsj.com/article/SB124864319667182053.html
Debt Deluge: Busiest Week in 24 Years
By MIN ZENG
The government will flood the Treasury market with a record amount of new debt this week, topping $200 billion.
It is banking on demand from abroad, particularly from foreign central banks, to help the eight auctions it is holding -- the busiest weekly schedule since 1985 -- to go smoothly. The hope is foreign buyers will help offset the improved appetite for risk that has driven stock markets sharply higher and yields on risky corporate debt to levels last seen before the Lehman Brothers bankruptcy in September.
"The interest from central banks again is likely to be strong, and the auctions should go fairly well," said Jeff Feigenwinter, head of Treasury trading in New York at BNP Paribas Securities, one of the 17 primary dealers that have to bid on Treasury auctions. "The risks are that, given improving risk appetite, people may decide to take money out of bonds and [put it] into stock markets."
Foreign demand has been the mainstay of the Treasury market this year as the U.S.'s borrowing needs have soared. The gross supply of Treasurys, excluding bills, was $1.15 trillion this year through July, up sharply from $434 billion last year and $350 billion in 2007, according to research firm Wrightson ICAP.
This week's auctions include a record $109 billion supply in two-year, five-year and seven-year notes, up from $104 billion in June and $101 billion in May.
The government is also selling $90 billion in three-month, six-month and 52-week bills and $6 billion in 20-year inflation-linked securities, topping up an existing issue.
So far this year, demand in Treasury auctions has been steady. Shorter-dated Treasurys have been particularly popular, not just among foreign investors but also among domestic buyers as the Federal Reserve has signaled it plans to keep short-term rates close to zero. That bodes well for the $42 billion sale of two-year notes Tuesday. Late Friday, the two-year yield was at 1.010%.
The sale of $39 billion five-year notes and $28 billion in seven-year notes Wednesday and Thursday could see less demand, though these auctions too should go smoothly.
The improvement in risk appetite this year has left its mark on the Treasury market's performance: government debt has lost 4.76% through Thursday after a return of more than 10% last year, according to Barclays data.
Write to Min Zeng at [email protected]
Debt Deluge: Busiest Week in 24 Years
By MIN ZENG
The government will flood the Treasury market with a record amount of new debt this week, topping $200 billion.
It is banking on demand from abroad, particularly from foreign central banks, to help the eight auctions it is holding -- the busiest weekly schedule since 1985 -- to go smoothly. The hope is foreign buyers will help offset the improved appetite for risk that has driven stock markets sharply higher and yields on risky corporate debt to levels last seen before the Lehman Brothers bankruptcy in September.
"The interest from central banks again is likely to be strong, and the auctions should go fairly well," said Jeff Feigenwinter, head of Treasury trading in New York at BNP Paribas Securities, one of the 17 primary dealers that have to bid on Treasury auctions. "The risks are that, given improving risk appetite, people may decide to take money out of bonds and [put it] into stock markets."
Foreign demand has been the mainstay of the Treasury market this year as the U.S.'s borrowing needs have soared. The gross supply of Treasurys, excluding bills, was $1.15 trillion this year through July, up sharply from $434 billion last year and $350 billion in 2007, according to research firm Wrightson ICAP.
This week's auctions include a record $109 billion supply in two-year, five-year and seven-year notes, up from $104 billion in June and $101 billion in May.
The government is also selling $90 billion in three-month, six-month and 52-week bills and $6 billion in 20-year inflation-linked securities, topping up an existing issue.
So far this year, demand in Treasury auctions has been steady. Shorter-dated Treasurys have been particularly popular, not just among foreign investors but also among domestic buyers as the Federal Reserve has signaled it plans to keep short-term rates close to zero. That bodes well for the $42 billion sale of two-year notes Tuesday. Late Friday, the two-year yield was at 1.010%.
The sale of $39 billion five-year notes and $28 billion in seven-year notes Wednesday and Thursday could see less demand, though these auctions too should go smoothly.
The improvement in risk appetite this year has left its mark on the Treasury market's performance: government debt has lost 4.76% through Thursday after a return of more than 10% last year, according to Barclays data.
Write to Min Zeng at [email protected]
