Tuesday, September 22, 2009


Mysterious CNBC Blurb on Treasury Auction

I am not being sarcastic, I want someone to explain what the heck this means. Below is the headline and blurb on the front page of CNBC for this story:


US Treasury debt prices held moderately positive after a record auction of two-year notes fetched strong demand but at a higher yield than might have been expected.
Am I missing something? It sounds like they're saying a lot of people wanted to buy Treasurys at a stable price, after the price was lowered. Am I being too cynical?

So, Treasury debt prices held "moderately positive"... That seems like a silly statement to me. I mean, if Treasury prices were negative, that would mean that people were paying to unload their Treasuries...

The first line of the story itself makes considerably more sense.

All that said - your interpretation sounds reasonable to me. Lots of demand for treasuries - but at a lower price (higher yield) than was hoped/expected.
What bond traders look at is the "bid to cover" ratio, in a Treasury auction, the number of bids received divided by the number of bids accepted.

Srtrong demand would mean lots of bids, around the winning rate, versus just enough to cover the amount the Treasury is auctionning.
Bid-to-cover 3.23 vs. Avg. 2.85 (Prev. 2.68)
RW, right, I (generally) understood that, so that's the "strong demand" part. But what about Treasury prices being "slightly positive" at a "higher yield than expected"?
Oh wow, I didn't read your entire clip (until now). I went to the original story to get context, they completely changed it around.


If you ever consider a job as an editor at CNBC, show them this post during the job interview.
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