Another solid Treasury auction – who needs the Fed?

June 25, 2009

Investors lined up again to buy Treasury debt, this time $27 billion of 7-year notes, putting to rest (at least for the moment) concerns about supply coming too fast for investors (and the Fed) to mop up. The bid-to-cover ratio comes in at a healthy 2.82 and indirect bidders – ie not big banks that have primary dealer status with the Federal Reserve – took down the bulk ($18.12 billion) of total. Not a bad days work.

The 10-year Treasury benchmark yield – the one everyone was so worried about two weeks again when it threatened to break through 4% – is now around 3.6%. That’s where it stood before the Federal Reserve announced Wednesday that it wouldn’t be stepping up or expanding its $300 billion program to purchase Treasurys.

Stocks also aren’t looking too shabby with the S&P 500 up around 2% at 919.9 points – back in black for the year.

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