Can a Treasury Auction Fail?ckarchive.com/b/68ueh8hkgkdn0fkq88gqmtzd87nkk
5641 sats \ 15 comments \ @siggy47 14 Apr econ
I have read about treasury bonds for years. For some reason, I have trouble really understanding treasury markets. The whole "tail" thing confuses me. Right now it might be more important, and interesting, to understand what's going on. Lavish explains everything, including basic bond terms, tails, and failed auctions. He also talks about btc, but in this case it's the bid to cover ratio.
TLDR: Things are ugly, foreign demand for treasuries is dropping, domestic demand isn't picking up the slack, BUT... banks probably have enough liquidity to keep the game going a while longer.
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85 sats \ 5 replies \ @grayruby 14 Apr
Isn't the tail simply the difference between the lowest price paid at auction and the average auction price?
Lavish is the best.
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60 sats \ 2 replies \ @siggy47 OP 14 Apr
Wow. You're good. You can skip the beginning.
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85 sats \ 1 reply \ @grayruby 14 Apr
I am pretty sure James covered auctions on either Peter or Preston's podcast some months ago. I don't know all these episodes blend into one over time.
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60 sats \ 0 replies \ @siggy47 OP 14 Apr
I know. I can't keep them straight in my head.
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50 sats \ 1 reply \ @Bell_curve 14 Apr
The tail is the high yield minus the bond’s when-issued yield
Positive tail means weaker than expected demand
Larger positive tail means worse auction
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10 sats \ 0 replies \ @grayruby 14 Apr
High yield = low price paid but thanks for clarifying the when issued part.
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76 sats \ 0 replies \ @Coinsreporter 14 Apr
Treasury bills or T-bills, which are money market instruments, are short term debt instruments issued by the Government of India and are presently issued in three tenors, namely, 91 day, 182 day and 364 day. Treasury bills are zero coupon securities and pay no interest.
How do you picture this?
For me they are the worst investment to have on your portfolio, at least here in India.
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75 sats \ 0 replies \ @kilianbuhn 15 Apr
In theory yes. In practice no because at an auction the price goes down / interest up until there is a sucker that takes the bet.
You can see this with junk bond from crappy companies. At some point the risk/reward is closer to a lottery bet and almost always someone is willing to gamble (until one day nobody is anymore ofc...)
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75 sats \ 1 reply \ @Bell_curve 14 Apr
Federal Reserve is the buyer of last resort
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0 sats \ 0 replies \ @kilianbuhn 15 Apr
They don't buy at auction tho. They only buy secondary on the market.
Although that's only a technicality. Entities can buy at auction knowing the fed will eat it up anyways when they sell...
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75 sats \ 3 replies \ @BlokchainB 14 Apr
I think the US treasury is going to start buying treasuries too per Marty Bent this should create artificial demand thus keeping rates from exploding higher
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10 sats \ 0 replies \ @siggy47 OP 14 Apr
QE infinity?
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0 sats \ 1 reply \ @Bell_curve 14 Apr
How would that work?
Treasury buys bonds from itself?
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10 sats \ 0 replies \ @BlokchainB 14 Apr
Yeah it’s all about duration. Sell short term bonds use funds to buy long term bonds
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21 sats \ 0 replies \ @TwoLargePizzas 14 Apr
I've heard a lot of opinions from a lot of different people over the years but there's one thing they all agree on. The money printing will continue.
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