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Weakest Demand For 3-Y Treasury Notes Since 2009 (Money Market Net Shorts Crash)

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

The Fed’s anticipated rate hike at the next FOMC meeting is causing a stir in money markets and Treasury auctions.

Liquidity moves markets!

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Monday’s $24 billion three-year U.S. note sale drew the weakest demand for the maturity since 2009, even as it yielded 1.452 percent, the highest in six years. The bid-to-cover ratio fell to 2.65, compared with an average of 2.8 for the last 10 sales. Indirect bidders, a class of investors that includes foreign central banks and mutual funds, stepped back, buying 42.6 percent, compared with an average of about 50 percent. Primary dealers, which are obligated to bid at auctions, filled the void, taking 48.5 percent, compared with a 39 percent average.


Bid to cover falls to lowest level since 2009.


And there is a record net shorts for money market funds as The Fed’s rate hike looms.


Danger, Will Robinson! Danger!




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