Treasury Yields Jumps as Treasury Auctions $123 Billion in Bonds; New Record
Posted on | October 22, 2009 | 1 Comment
Treasury yields moved higher Thursday as the US government announced that they are going to auction $123 billion in bonds. This number tops the prior record of $115 billion that was set in July. The government will sell $44 billion in 2 year notes, $41 billion in 5 year notes, $31 billion in 7 year notes and $7 billion in TIPS. As expected, treasury prices dropped and treasury yields rose at this news.
As the government continues to sell US Treasuries we have to ask the question who is going to purchase all of these bonds. Over the last few months the Federal Reserve Bank has been gobbling up these treasuries but that is going to change at the end of October. Ben Bernanke and the Federal Reserve Bank announced that they are going to stop buying treasuries by the end of the month.
If the Fed is going to stop buying treasuries this means that the foreign investors are going to have to step up. China and Japan are the biggest investors in US Treasuries but are they going to pony up the extra money that the Fed has been sinking into treasuries? If they are not we can expect to see treasuries do decrease greatly as yields start moving much higher.
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Author: Alan Lake
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October 22nd, 2009 @ 5:24 pm
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