Treasury 10 Year Bid To Cover Falls To 2009 Levels Signalling Fed Tapering (Higher Rates Coming?)

Confounded Interest ^ | 08/07/2013 | Anthony B. Sanders

[whitedog57]

The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, today printed at 2.45 for the 10 year Treasury auction, the lowest since April 2009. This decline reflects concern that the Federal Reserve will slow its asset purchases.

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And the bid to cover ratio has really been falling since 2012 as the 10 year Treasury yield has risen.

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Here is a closer look at the bid to cover, the 10 year Treasury yield and the Bankrate 30 year fixed-rate average.

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As the market fears a tapering of Fed stimulus, the bid to cover falls and both the 10 year Treasury rate and mortgage rates rise.

[whitedog57]

Here come da Judge!

[rdcbn]

We are going to be SO screwed when interest rates tick up.

[Bloody Sam Roberts]

Since 2008, when the fiscal cliff started to come into plain view, I have been saying that this is the thing to watch. The interest rate on the 10 year T-Bill. If it hits over 4%, we are screwed.

[Signalman]

We are going to be SO screwed when interest rates tick up.

Not me. I pulled out of the market and have all my stash in fixed income. I want higher interest rates. The sooner, the better.

[Toddsterpatriot]

If you hold bonds, your stash will decline in value if rates rise.

[upchuck]

LEARN!!

The 10 year Treasury auction went off today with some unsettling trends.

Aug. 7 (Bloomberg) — The U.S. Treasury Department sold $24 billion of 10-year notes at a yield of 2.62 percent, the lowest since last month, as demand fell relative to the last auction of securities with the same maturity.

The auction yield was lower than the 2.635 percent yield traders anticipated in a Bloomberg News survey before the auction.

The bid/cover ratio, which gauges demand by comparing the number of bids to the amount of securities sold, was lower at 2.45, indicating weaker demand. At the Treasury’s last sale of the notes the ratio was 2.57. The bid/cover ratio was the lowest since 2.14 at the March 11 2009, auction.

Indirect bidders, a group that includes foreign central banks, bought 46.3 percent of the amount sold, compared with 38.6 percent in the prior auction. Primary dealers bought 38.5 percent, compared with 45.2 percent in the previous sale. Direct bidders purchased 15.2 percent.

The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.45, the lowest since April 2009. This decline reflects concern that the Federal Reserve will slow its asset purchases.

And the bid to cover ratio has really been falling since 2012 as the 10 year Treasury yield has risen.

Here is a closer look at the bid to cover, the 10 year Treasury yield and the Bankrate 30 year fixed-rate average.

As the market fears a tapering of Fed stimulus, the bid to cover falls and both the 10 year Treasury rate and mortgage rates rise.

People get ready!

[Vermont Lt]

Oh, don’t worry . You will get higher rates. Remember in the seventies when you could get CD’s at 10% plus. My first mortgages was at 15.5% when I sold my home because it had an assumable mortgage. 15.5% was a deal then.

You will get what you wish for.

Except gas will be six bucks a gallon and food will be 25-30% higher than it is now. It’s all relative.