The chart below plots Indirect Bidder (i.e. foreign buyers of Treasuries) Percentage on the left Y axis and Bid to Cover Ratio on the right Y axis for 13-week bill auctions since October 2009.
Note that both Indirect Bidder Percentage and Bid to Cover Ratio seem to have broken the respective support (around 25% for Indirect Bidder Percentage and 3.8 for Bid to Cover Ratio).
at 12:41 PM
Labels: 13-week Bill, Chart
| Terminology | |
| SOMA | System Open Market Account at the Federal Reserve New York Bank |
| Primary Dealer | A bank or securities broker-dealer that may trade directly with the Federal Reserve System. Primary Dealers are required to bid at Treasury auctions. Current list of Primary Dealers is available at New york Fed. |
| Indirect Bidder | Supposed to be the foreign investors, both foreign central banks and foreign private investors |
| Bid to Cover ratio | The number of bids received divided by the number of bids accepted. The higher the ratio, the higher the demand. |
| Reopening | The U.S. Treasury issues additional amounts of a previously issued security. The reopened security has the same maturity date and coupon interest rate as the original security, but with a different issue date and usually a different purchase price. |
| Cash Management Bill (CMB) | A short-term security sold by the U.S. Department of the Treasury. The maturity on a CMB can range from a few days to six months. The money raised through these issues is used by the Treasury to meet any temporary shortfalls. CMBs tend to pay higher yields than bills with fixed maturities, but their shorter maturities lead to lower overall interest expense. |
| Supplementary Financing Program (SFP) | A program initiated by the U.S. Treasury Department at the request of the Federal Reserve in September 17, 2008. The cash raised from the auction will be used in the various Federal Reserve initiatives to support the financial markets and manage its balance sheet. |
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