Indirect Bids Up at Four-Week Treasury Bills Auction on April 14
Like strong overall demand, market demand for four-week Treasury bills also rose from the previous week. Indirect bids were 29.9% from 24.5% week-over-week.
The U.S. Department of the Treasury auctioned 13-week T-bills worth $24 billion on April 13. The amount on offer was the same as the previous week.
After two weeks of staying away, indirect bidders, which include central banks, came back to buy 26-week Treasury bills. It was a rare occurrence.
Economic indicators were the primary movers of Treasury prices in the week to April 17. Treasury yields flattened after the release of the data.
While the risk-averse investors are resorting to US Treasuries, which provide higher yields, others are looking at stocks that pay high dividends for yield.
Yields have been dropping in this period, leading investors to prefer government bonds over stock, especially the safer ones, including the German Bunds.
Leveraged loans mutual funds saw outflows in the April 10 week. But quantum of outflow was $4 million, much lower than net outflow of $445 million the previous week.
Murray Energy, a privately held coal miner, was the highest issuer of leveraged loans in the week to April 10, raising $2 billion in loans.
The largest issuers of high-yield bonds in the primary market last week were Fiat Chrysler Automobiles, GM Financial, and Mallinckrodt International.
Investors showed interest in high-yield bonds in the week ended April 10. Fiat Chrysler issued B2/BB- rated junk bonds worth $3 billion.
In the week to April 10, junk bonds, or high-yield debt issuers, returned to the primary market. It was the same week the FOMC released its March 2015 meeting minutes.
US equity indices rose 1.7% in the week to April 10, along with the S&P 500. The Fed’s March 2015 meeting minutes were the primary market movers.
High-grade bond issuance in the primary market increased in the week to April 10. Yankee bond issuers dominated the primary market for the third consecutive week.
Yankee bonds continued to dominate primary market issuance in the week to April 10. These bonds made up 40.7% of all the issues.
Corporate investment-grade issuance surged to $20.525 billion in the primary markets in the week to April 10, 2015—413.1% higher than the issuance the previous week.
When we talk about investment-grade bonds, we’re essentially referring to their credit rating. These bonds are rated BBB- and above by Standard & Poor’s.
The FOMC met on March 17–18, in a scheduled meeting, to decide on the course of monetary policy. The meeting minutes were released on April 8.
Purchasing US Treasuries with foreign currencies has become popular. Investors in government bonds primarily seek minimum default risk and high liquidity.
While low European rates don’t represent a ceiling for US yields, they’re suppressing US rates, especially with the current strength in the US labor market.
Market demand for ten-year Treasury notes fell in April as both direct and indirect bids fell. Indirect bidders include foreign central banks.
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