Treasury Auction Trends

TIC flows suggest that China has steadily backed away from US Treasuries since May 2009. Since TIC flows are hardly transparent, it is difficult to know for certain if this is the case, or money is being redirected through other proxies.

One thing is certain the composition of participating (who’s placing and winning the bids) is rapidly changing in the treasury auctions. The primary dealers are increasingly being squeezed out by direct and indirect bidders. Note that direct bidders, largely anonymous, are non-primary dealer submitters bidding for their own house accounts. Indirect bidders, also difficult to track, are customers placing competitive bids through a direct submitter, including Foreign and International Monetary Authorities placing bids through the Federal Reserve Bank of New York.

Are the primary dealers being squeezed out by choice or a consequence of maintaining price, thus, controlling economic perceptions? In light of these trends, today’s 10-year auction results should provide to be interesting.

10-Year Auction Results & Trends:


Source: treasurydirect.gov