Central banks have shown record interest in treasuries

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Центробанки проявили рекордный интерес к трежерис

The US Treasury conducts regular placement of government bonds, but the auction of ten-year securities on Wednesday caused considerable interest.

This auction has become a real blockbuster. First of all, it is worth noting that the yield on treasuries sold was the lowest since December 2012 and amounted to 1.73%. But the interesting moments are not over.

The volume of deals totaled $23 billion, this time from non-residents was observed literally the high demand.

Central banks of different countries have submitted bids for 83% of the volume of paperwork, and as a result, they were sold 73.5% of the historical record. The share of the local financial institutions had to 11.8%, which is broadly comparable with the average values for the last time. And the primary dealers of the time bought for itself almost the minimum amount of securities – a total of 14.7% of the issue . To be precise, to less they took only one day. During the last ten auctions the primary dealers bought an average of 25%.

It is obvious that such alignment of forces is due to the activity of Central banks, which, it seems, tried to take as many “paper”, how much they could buy at the moment.

Perhaps the only weak moment in this auction was the ratio of supply and demand (bid to cover). He dropped from 2.75 to 2.68.

By the way, in this American quarter of the Ministry of Finance will have to redeem more securities than to draw, which is not often. Creditors must return about $65 billion.

We add that the U.S. Treasury this week has a pretty busy schedule of placements. Were on Tuesday sold three-year paper in the amount of $24 billion, and still today held an auction of thirty-year bonds in the amount of $15.

Note also that at the end of last year for the first time in the history of decreased investments in treasuries by other countries. Over the past year, global regulators have got rid of us government bonds for a total of $225 billion, which was a record for all history of existence of treasuries. Peter Boockvar, a senior analyst at the Lindsey Group, is warning customers that invest in government debt: foreigners no longer our best friends for life.

We have to admit that the Central Bank sell treasuries is not a good life: the proceeds are used primarily for patching holes in the budget and stimulate their own economies.

A classic example is China. Economy slows, the yuan is falling faster than is required of the parties, volatility in the stock markets remains high. According to the U.S. Treasury, in January China became the largest seller of us debt, throwing on the market of treasuries by $8.2 billion.

More recently, oil prices rose for the first time in decades fell below $30 per barrel. Therefore, after China, the biggest sellers of treasuries have become oil-producing countries, both developed and developing: Norway, Mexico, Canada and Colombia.

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