IR and Treasuries Market Report
Morning musings
The treasury market will focus on supply/demand today with the 30 year bond auction and the Fed buying paper in the 2018 to 2019 area via the twist. Looking at the bond auction, the average bid to cover over the last year has been 2.68 with a min and max of 2.08 and 3.05 respectively. The dealer take has averaged 50.9% with a a min and max of 40.3% and 68.3% respectively.
Central bank policy continues to be pro-growth and pro-inflation with the BOE expanding its asset purchase program by stg50 bln. The BOE will be operating three times a week at stg1.5 bln for each maturity sector of 3 to 7 years, 7 to 15 years, and over 15 years. The ECB also expanded its collateral to include credit claims.
There appears to be lingering skepticism over the outcome of the Greek austerity deal. The high unemployment rate, April election, and planned strikes create hurdles to execution. Further, the ECB did not shed light on its participation in the Greek debt restructuring. A private sector restructuring of Greek debt needs to be achieved in order to put Greece on the back burner.
There appears to have been a foreclosure settlement. The settlement is set at $26 bln and could rise to $40 bln. The stock market has reacted with a cool tone toward the agreement. The cool reaction in the equity space may provide some support to treasuries.
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*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.
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