Can someone dumb this down for me?
I think it means nobody wants our debt.
Yet even with this Treasury had to pay up to get it to go and the bid-to-cover was anemic at best.
Given the Primary Dealer system we have in this country, any BTC under 2.0 is an effective fail. To get an auction that behaves in this sort of fashion, complete with mystery direct bidders and heavy SOMA (Fed) participation, yet Treasury has to pay up in the form of a significantly higher coupon is not a good sign at all.
LOL...that’s exactly what I was thinking. Please someone dumb this down for us.
You beat me to the question. I'm hoping that someone can give us a little supporting analysis here. I think this is an important issue. I'm naturally suspicious of the Fed & Treasury monetizing our debt but need a little help interpreting the data.
It means the price of long term government bonds was in a steap decline until the Fed and a mystery buyer showed up to the counter. As the price of a bond declines, the yield (interest rate paid to the purchaser) goes up. Thus, there was little interest in the US Government’s bonds unless it paid a higher interest.
This has adverse affects for the economy for any number of reasons. Home loan interest rates go up relative to 30 year bond yields. Commercial loans, both for real estate and general bonding go up.
It introduces uncertainty into an already uncertain market.
Gold and lead my friend. Gold and lead.
(”mystery” direct buyers out here again taking nearly 25%) That mystery buyer could be the government buy back their own debt, i.e. printing money.