DislikedHi all,
In a disturbing development which has implications for future sales of US Bonds, “ the British Government admitted yesterday that, for the first time since 1995, investors had been unwilling to buy the full complement of its so-called gilt-edged bonds at one of its official auctions.
Gilts are the financial instrument it sells to investors to fund public spending
[color=blue]Fears are growing on the financial markets that Britain may not be able to repay the billions of pounds in debt it is amassing...Ignored
The 5yr auction yersterday tailed 5.1 basis points. 1bp in the 5yr paper is 1-1/2 over 32. So 5bp is 7 1/2 over 32. Let's make it 8/32 just because it's easy to calculate and I'm a lazy person. So for every million paper they sold they paid an extra $2,500. They sold $34 billion, which means the taxpayers paid $85,000,000 extra for a 5yr paper! Think about that.
7yr today went rather well but indirect bids were way below average.
I remember 10yr was trading around 2.95-3.00 level before the QE annoucement and dived into the 2.50s, now it's trading back up at 2.74. And didn't they just start QE yesterday? That didn't keep the yield low, did it?
I think they're done issuing papers now until early April, it'll be interesting to see what happens then.
Take a report.