While I Was Away: Treasury Blinked
Reduced the size of the next 30-year bond auction to $11 billion from $14 billion previously.
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June 8th, 2009 at 2:18 pm
FYI, the 30-year auction is a reopening. The reopenings are always smaller than the original issue auctions. $11 bln is unchanged from the prior reopening, back in March. So, not blinking just yet. In fact, given that Treasury will now be reopening issues twice, they are still ratcheting up the overall auction size for each individual bond.
June 8th, 2009 at 2:33 pm
You have a point, but to my knowledge, there is no law that says that reopenings have to be smaller than the original issue.The issuance cycle for the long bond is now monthly and to the question “can Treasury raise $11 to $14 billion monthly, via 30-year paper” , my guess answer is NOT for very long, especially with the collateral damage inflicted on long duration MBS and potential for a disastrous negative convexity hedging event. We shall see.