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The Market Certainly Doesn't Expect the Government Deficit to Push Up Interest Rates

Peter Boockvar:

30 year auction | The Big Picture: The 30 year bond auction was good as the yield was a touch below where the when issue was trading right before and the bid to cover of 2.54 was above the average seen this year of 2.32 and the 2nd highest going back to May ‘08. Indirect bidders totaled 48.1%, about the same as the previous two. There is no better sentiment test on inflation expectations than the 30 year bond auction considering a buyer gets no protection from inflation over a long period of time and today’s auction definitely passes the test. Maybe the Fed’s decision to end the buying of Treasuries by the end of October gave foreigners confidence that the debasement of the US$ may take a breather, thus giving them more confidence in their investment. The Treasury will start issuing 30 year TIPS by maybe year end.

U.S. Treasury - Daily Treasury Yield Curve.gif