COMMENT: The makeup of marketable United States treasury securities is approximately 10% bonds, 54% notes and 28% bills. Offerings of notes and bonds are less frequent than bills due to the longer duration. This particular auction will be closely monitored for two reasons. First, it will give an indication as to the global appetite for less risky assets. Second, and perhaps more importantly, this auction could act as a defacto vote of confidence or lack thereof regarding the prospects of the United States. With mounting deficits the United States has to turn to the bond market to finance the budgetary gap. With the 30 year rate currently yielding 4.428% and the 10-year yielding 3.544% (as of Thursday morning) both are well below 30 year averages. The question now becomes, at what interest rate will these securities have to be offered at in order to attract the interest of buyers?
Total Securities Outstanding – Marketable and Held by the Public as of September 30, 2009
The foreign appetite for short dated Treasuries has increased since the pre-Lehman failure days while the desire for long dated notes and bonds has remained fairly constant.
Foreigners own approximately 50% of U.S. treasury securities. Below the top 10 holders are illustrated along with the total foreign ownership of U.S. treasury securities.
Major Foreign Holders of Treasury Securities
Further Reading: Long, Short Treasuries Diverge
Follow Up: (11/10/09) Treasurys mixed after 10-year note sale