Mysterious U.S. Treasuries Buyers May Be Banks

Monday, 12 Apr 2010 07:11 AM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
An analysis by a primary dealer in the U.S. Treasuries market shows that domestic banks could account for a large increase in direct bidders for government debt.

The presence of direct bidders, one of three main categories of participants at Treasury auctions, has increased during recent auctions of securities.

Primary dealers, the banks and investment firms authorized to deal directly with the government and help the Federal Reserve carry out monetary policy, have fretted over the unpredictability of the direct bid, as well as the paucity of information on the identity of the bidders.

A report from Nomura Securities analyzing the Treasury Department's investor allotments and auction data theorizes that domestic banks account for part of the increase in direct bidders.

"With banks still reluctant to lend and the saving rate on the rise, bank assets have been shifting from loans to securities, benefiting from the steep curve," wrote George Goncalves, a fixed income strategist at Nomura.

Treasury data shows banks increased their purchases of longer-dated Treasuries just as the percentage of direct bidders began to increase.

The department, which is aware of the identities of bidders but does not disseminate the information, welcomes the added participation in auctions as the government continues to issue new debt at a breakneck pace.

"At the March 10-year (note) auction, banks purchased $2.6 billion 10s (the highest on record)," Goncalves wrote. "Meanwhile banks purchased over $3 billion in (30-year bonds) in March too. This is noteworthy as in the past banks rarely went beyond the five-year point in this sort of size."

Nomura's analysis follows a hypothesis by Barclays Capital earlier this year that an increase in the direct bid was driven mainly by domestic money managers and mutual funds attempting to keep their purchases secret from the rest of Wall Street.

© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Sharpton Leads Thousands in March Against NYC Chokehold Death

Saturday, 23 Aug 2014 07:21 AM

Thousands of people expressing grief, anger and hope for a better future have taken to New York City streets to protest  . . .

Gallup Poll: Republicans See Immigration, Morals as Top US Problems

Saturday, 23 Aug 2014 13:23 PM

Republicans believe immigration and moral decline top the nation's main problems, but Democrats say the most pressing is . . .

Texas Marijuana Farm a Rare Find Near Border

Saturday, 23 Aug 2014 11:39 AM

Officials say a two-acre field of marijuana recently found just 25 miles from the Texas-Mexico border was sophisticated  . . .

Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved