The Daily Update: Dealers caught on the hop

On Monday the US Treasury released details of the 10-year treasury auction on the 11th of August. This was the bumper auction which caught dealers off guard and left them scrambling for paper. It is reported that Foreign and International investors, which includes foreign central banks, took down a whopping $15.4bln of the $41bln on offer, an all-time high in volume and the highest percentage, 38%, in over a decade. This was a dream of an auction for the US Treasury as the new bonds priced 3bp lower than prevailing issues at the time.

There are many ideas regarding the surprise demand. China released their highest currency reserves since 2015 in July 2021 and is one buyer that seems to fit. Also, if we look back, we wrote about the new Fed Repo facilities which may have added to demand for UST especially as the amount of T-Bills in circulation has dropped significantly as the Treasury cuts back on new issuance.

It will be interesting to see how this week’s supply performs. Yesterday the two-year at $60bln saw good demand and we have $61bln in the new five-year today and $62bln in the seven-year maturity tomorrow.

Elsewhere, Peloton Interactive Inc. are back with their expansion into treadmills, the cheaper $2,495 product will be on sale in the UK, US, Canada on August 30th and Germany later this year. It was dropped in May due to the screen falling off and injuring the users. The more expensive version, $4,295, was also stopped in May, after a number of child injuries were reported.

I was looking at the Peloton range, especially the exercise bike at £3,495, but it was pointed out we already have a “coat rack”.