Take look at the two bonds sold today.

One is ultra long called the 30 year bond where the auction went absolutely terrible, abysmal, 2.37 bid/cover. They were lucky to keep it above the minimum 2.0 bid/cover ratio.

http://www.treasurydirect.gov/instit/annceresult/press/preanre/2009/R_20091008_2.pdf

The other was an ultra short 16 day CMB where bid to cover was 6.29. Is Bernanke going to start raising interest rates with a spread in bid/cover of nearly 4.0 between ultra short and ultra long, I don’t think so unless he wants to send the US into collapse.

http://www.treasurydirect.gov/instit/annceresult/press/preanre/2009/R_20091008_1.pdf

Bernanke can’t raise rates until unemployment starts heading down significantly. Unemployment can’t start going down so long as those in the White house and congress are killing jobs.

koot

Related Posts:

• Today the treasury is selling $124 billion of short term debt including one longer term 2 year note of $44 billion.
• Not much has been mentioned today regarding the 2 year treasury sale.
• More important than fundamentals are the carry/risk trades :
• Focus on the big picture re: employment.
• There is one scenario where interest rates will not rise significantly.

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