Wednesday, October 16, 2013

More on Wall Street and Treasury Bills

Here's another good article delving into the nuances of the Wall Street and the market for Treasury securities:
 
"Treasury Paying $120 Billion in Bills Doubted as Fitch Warns"
 
The actual story is quite a bit less ominous than that headline, although some market participants are rather agitated. As one said, "the bill market will continue to trade choppily and auctions will not go well." Actually, I think the T-bill auctions on Tuesday went a lot better than I would have expected.
 
There are three more T-bill auctions on Wednesday, for 1-month, 6-month, and 1-year bills. These will all settle on Thursday, October 17th as well.
 
Actually, all of these auctions should do reasonably well (meaning significantly oversubscribed by a factor or ratio of 2 or more). The perceived problem is not getting paid a month or 6 months or a year down the road, but what happens during the budget/debt negotiations over the next two weeks for bills that were issued in past months, as well as coupon payments for Treasury notes and long-term Treasury bonds.

-- Jack Krupansky

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