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Here Comes the First 2012 U.S. Bond Auction

01/09/2012

The week of January 8 presents the first 2012 U.S. government bond auctions.
 
The 10-year U.S. Treasury yield is my number one indicator for 2012 -- the ultimate indicator of whether a generational reallocation out of Treasuries will foster a powerful advance in all risk assets.
 
Unfortunately, yields continue to trade at the lower end of 2011’s 1.67% to 3.76% range (Figure 1.1). In fact, since November 1, the 10-year has traded in a very tight range between 1.79% and 2.16% (Figure 1.2). A sustained breakout above 2.05% would be an encouraging first step.
 
This week’s Treasury auction schedule
 
•   Monday, January 9

o   $29 billion in 3-month bills to be sold
o   $27 billion in 6-month bills to be sold

•    Tuesday, January 10

o   Fed purchases $1 billion to $1.5 billion in notes
o   Treasury sells 4-week bills
o   $25 billion in 52-week bills to be sold
o   $32 billion in 3-year notes to be sold

•    Wednesday, January 11

o   $21 billion in 10-year notes to be sold

•    Thursday, January 12

o   $13 billion in 30-year bonds to be sold 

Figure 1.1  U.S. 10-Year Treasury Yield, Past 52 Weeks

Source: Bloomberg
 
Figure 1.2 U.S. 10-Year Treasury Yield, November 1, 2011 to January 6, 2012

Source: Bloomberg
 

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