By Jeff Harding
Here’s the schedule for this week’s Treasury auctions:
$31 Billion in 13 Week Bills, August 24
$30 Billion in 26 Week Bills, August 24
$27 Billion in 52 Week Bills, August 25
$42 Billion in 2 Year Notes, August 25
$39 Billion in 5 Year Notes, August 26
$28 Billion in 7 Year Notes, August 27
This will be interesting. $197 billion. The last auction went fairly well for Treasury. I suspect these auctions will go well because they are all of relatively short term, except the 7 year notes. I worry about a lot of things related to these sales and one of them is whether or not they will attract buyers at current interest rates. Everyone is watching to see if the Chinese and Japanese are strong buyers.
I think Summers, Geithner, et al have the attitude that our creditors have no choice but to keep buying in. There may come a point where they cannot. What then?
Well, that is the problem, isn’t it. Juice the rates, more TIPs, monetize it. None of which are good.
The last auction went well because a third party bought the debt, but then a few days later re-sold it back to the US. You could call it a sham transaction.
Joanbob, go to the head of the class!