The 13 week and 26 week bill auctions were strong with the expected increase in the indirect bid as a result of this week’s paydown from the non-renewal of the weekly $25 billion in Supplementary Financing Program Cash Management Bills. However, the overall bid/cover was lower than last week. Apparently Primary Dealers were less aggressive about rolling their expiring CMBs and are willing to sit in cash until something better comes along.
The 4 week bill was announced at $35 billion instead of the expected $25 billion. That’s $10 billion more than the rollover. That reduces the net paydown at Thursday’s settlement from the previous estimate of $22 billion to just $12 billion, which is still a lot of cash to add to this week’s POMO. Therefore the overall impact on the market should not be materially affected by the reduction in the paydown.
Subscribers should review last week’s Treasury update for complete background data and analysis. The next Professional Edition Treasury update will be posted Thursday afternoon.
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