Finishing off this week’s series of long-term securities auctions, the Treasury Department sold $29 billion worth of seven-year notes on Thursday, attracting weak demand.
The seven-year note auction drew a high yield of 1.792 percent and a bid-to-cover ratio of 2.32.
Last month, the Treasury also sold $29 billion worth of seven-year notes, drawing a high yield of 1.834 percent and a bid-to-cover ratio of 2.37.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
The ten previous seven-year note auctions had an average bid-to-cover ratio of 2.50.
The bid-to-cover ratio in the latest auction was well below the recent average and at the lowest level since May of 2009.
Peter Boockvar, managing director at the Lindsey Group, said, “Bottom line, the very weak auction on the heels of the soft one yesterday is in the context of a sharp drop in yields over the past few weeks but it is helping to establish a level of yields that are no longer attractive to investors.”
“This back up in yields is also noteworthy in that it’s happening coincident with a pullback in stocks,” he added. “But, it’s also happening with a weaker U.S. dollar and rise in commodity prices.”
Today’s seven-year note auction came after the Treasury sold $26 billion worth of two-year notes on Tuesday and 35 billion worth of five-year notes on Wednesday.
The material has been provided by InstaForex Company – www.instaforex.com