{"id":14402,"date":"2011-08-11T13:40:37","date_gmt":"2011-08-11T17:40:37","guid":{"rendered":"http:\/\/www.thedisciplinedinvestor.com\/blog\/?p=14402"},"modified":"2016-09-20T09:14:19","modified_gmt":"2016-09-20T13:14:19","slug":"nasty-30-year-bond-auction-is-not-pretty","status":"publish","type":"post","link":"https:\/\/thedisciplinedinvestor.com\/blog\/2011\/08\/11\/nasty-30-year-bond-auction-is-not-pretty\/","title":{"rendered":"NASTY: 30 Year Bond Auction Is Not Pretty"},"content":{"rendered":"

Make any excuse you want, the fact is that there is a simple reason why there was a poor showing for the 30 year auction: Less people want the product at previously paid prices. Translating that is also rather simple: A downgrade of the credit rating of the U.S. along with sovereign debt worries around the world have pushed buyers to the shorter end of the curve.<\/p>\n

Notice the spike in rates when the auction results were announced.<\/p>\n

\"\"<\/a><\/p>\n

According to Bloomberg:<\/p>\n

Treasury 30-year bonds extended losses after an unexpected drop in U.S. initial jobless claims sapped demand at the $16 billion offering of the debt. The first auction of the securities since Standard & Poor\u2018s cut the U.S. credit rating on Aug. 5 produced a yield of 3.750 percent, compared with the average forecast of 3.622 percent in a Bloomberg News survey of eight primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount offered, was 2.08, compared with an average of 2.64 at the past 10 sales.<\/p><\/blockquote>\n

We disagree with the commentary from Bloomberg. The claims data should have had little impact as it is still well above normal levels. In addition, economic reports have shown a deteriorating global economic condition. So, it is better to look the truth squarely in the eye: The U.S. has too much debt outstanding and the safer play is to pick up shorter maturities.<\/p>\n","protected":false},"excerpt":{"rendered":"

Make any excuse you want, the fact is that there is a simple reason why there was a poor showing for the 30 year auction: Less people want the product at previously paid prices. Translating that is also rather simple: A downgrade of the credit rating of the U.S. along with sovereign debt worries around […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[5,12],"tags":[293,483],"class_list":["post-14402","post","type-post","status-publish","format-standard","hentry","category-economy","category-markets","tag-fixed-income","tag-markets","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"acf":[],"_links":{"self":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/14402","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/comments?post=14402"}],"version-history":[{"count":0,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/posts\/14402\/revisions"}],"wp:attachment":[{"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/media?parent=14402"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/categories?post=14402"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedisciplinedinvestor.com\/blog\/wp-json\/wp\/v2\/tags?post=14402"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}