Bond market yawns at U.S. default and buys $35 billion in 5-year Treasuries at today's auction

07/27/2011 4:19 pm EST


Jim Jubak

Founder and Editor,

Still no buyers strike or even a whiff of panic in the market for U.S. Treasuries. Although global stock markets sure are getting anxious.

Today’s auction of $35 billion in five-year notes doesn’t rate as a rip-roaring vote of confidence as Congress fiddles with raising the U.S. debt ceiling. But the Treasury Department sold these notes with a yield of 1.58%. That was a small increase from the 1.562% yield in the market just before the auction.

The bid to cover ratio, a measure of how many bids there were for each dollar of bond offered in the auction, was 2.62. (There were $2.62 in bids for every $1 in the auction, in other words.) That was higher than the 2.59 of a month ago, but below the average of 2.84 in the four previous auctions of five-year notes.

Indirect bids, a pretty good proxy for buying by foreign central banks and other overseas investors fell to 36.6% from a recent average of 41.8%.

The five-year Treasury note closed for the day at a yield of 1.52%



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