Here are just a few of the key observations from this week’s report.
• The 10 year Treasury yield today is higher than on the day QE3 was announced, and much higher than on the day the cash from the program actually began to flow. The Fed has failed to keep yields from rising. While they would likely have risen more had this program not existed, the fact that they have risen at all suggests that secular sentiment has begun to shift against bonds.
• The first concrete impact of the debt ceiling will be felt next week as the Treasury did not schedule $63 billion in new Treasury notes that normally would have been auctioned next week. Announcement that the House has passed an increase of the debt ceiling means that this supply will be coming soon. That should have only a minor impact on the market at the time. The Fed is still printing more money than new supply will absorb.
• Withholding tax collections have pulled back from huge year to year gains due to accelerating income recognition from 2013 to 2012 in order to beat the increase in tax rates due on January 1. However, withholding and other taxes continue to be strong versus the same period of 2012. There’s no sign of the economy deviating from the recent trend.
Table of Contents
Treasury Auctions 3
Week Just Completed 4
Week Ahead 6
Treasury Auction Takedowns By Investor Class 6
Primary Dealer Treasury Holdings 10
Bond Fund Flows 15
Bank Holdings of Treasuries 16
Federal Revenues 17
Economic Data Schedule 26
10 Year Treasury Yield 27
US Dollar 29
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