- Bid-to-cover for 10-year Treasury has fallen to the lowest since 2009, as debt fueled tax-cuts increase Treasury issuance to records.
- Although demand has fallen to 2.46x total amount of bonds being auctioned,(from as high as 3x in 2013) it is still well above the 1x level, which marks a failed auction and has not been hit since 1983.
- “Treasury supply is further exacerbating what should be a natural move away from the market as interest rates climb, says Thomas Simons - an economist at Jefferies. He adds, "This supply issue is going to cause a lot of pressure on the market.”
- Other buyers - like banks who are designated primary dealers - have also reduced Treasury holdings since post financial crisis regulations have made it more expensive to hold government bonds on the balance sheet.
- ETFs: TLT, TBT, TIP, TMV, IEF, RINF, SHY, TBF, EDV, TMF, VTIP, TTT, ZROZ, PST, SCHP, MBB, VGLT, IEI, TLH, BKT, PLW
- Now read: Quantitative Tightening Is Right On Schedule
Original article