Interest Rate Roundup

Thursday, August 10, 2006

30-year bond = lead balloon

The Treasury just sold $10 billion worth of 30-year bonds. Let's just say the sale went over like a lead balloon. The bid-to-cover ratio was just 1.77, down from 2.05 previously. That's a key measure of demand -- the higher the number, the more demand there is. The bonds also yielded 5.08% at the sale, above forecasts for 5.054%, according to Bloomberg. Another strike out.

Why such a poor auction? Well, would you want to lock up a pathetic 5.08% yield for 30 years when you can get roughly the same yield on 3-month bills and 1-year Certificates of Deposit .. with much less inflation risk?


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