us deficit + tuesday bad note sale

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    It was just brought to my attention that in the budget report issued by the
    prez, in which he stated the deficit to be the horrendously large number of
    $455 billion -- that if you go on to page 57 of the report the deficit is
    calculated to actually be $698 billion. Un believeable that we find ourselves being
    led by this "Ship of Fools".

    Then Colonel Hackworth states that the actual cost of current Iraq excursion
    is not $2 billion/wk as first reported by gov., and not $4 billion/wk as later
    reported by govl, but actually more like $6 billion/wk -- $6 billion x 52 wk
    = $312 billion in Iraq alone????

    I guess our leaders think that we dirt busted farmers have more to give??
    Maybe they figure that the higher they can get the unemployment numbers -- the
    more youngsters they can get to enlist in military for their subsistence???

    This is all bound at some point to impact our economy, and when you consider
    that only 10% of our economy actually produces something -- and the other 90%
    shuffles paper or hamburgers -- makes one wonder how long they can keep up the

    Best Regards,

    Closing Financial Futures Market Report for Tuesday, 8/5/2003
    Debt futures finished sharply lower on a day when the market got a much stronger-than-expected survey on the service sector but a weaker-than-anticipated auction of three-year notes.

    Sep 10-year notes settled down 26 ticks at 110-27.0, while Sep Treasury bonds lost 1 13/32 to 105-9. The Sep 5-year note retreated 19.5 ticks to 111-12, and the Sep 2-year note dropped 9.2 ticks to 107-06.

    Fed Fund futures settled unchanged to 10 ticks lower across the board, while the Sep 10-year municipal note index fell 22 ticks to 98-14.

    The Sep 10-year agency contract slipped 4 ticks to 106-19, and the Sep 10-year interest rate swap edged 5 ticks lower to 107-06.

    Prices were already softer early Tuesday afternoon when the market got results of a disappointing auction of $24 billion in three-year notes that was the first leg of quarterly refunding operations going on this week. As a result, the market headed to even lower ground.

    The yield as of the bidding deadline for the three-year auction was 2.38%. The yield was awarded at 2.422%. The bid-to-cover ratio, an indication of demand, was just 1.32.

    "It was a dismal auction," said Jon Jacobs, fixed-income analyst with IDEAglobal.

    Analysts had anticipated the auction would have been better received.

    "Most people thought it would be a fairly decent auction - not great but not bad," said Briggen. "It surprised everyone. It was absolutely horrible ... There just wasn't much demand."

    The results prompted worries about how much demand there will be for five- and 10-year notes in upcoming auctions, she said. "Obviously we have to cheapen them more to lure in retail."

    The Treasury is scheduled to auction $18 billion in five-year notes on Wednesday and $18 billion in 10-year notes on Thursday.

    "There had been some anticipation with yields up so much (in recent weeks), that would draw at least a good (Wall) Street bid, if not necessarily a lot of retail bid," said Jacobs. "But that doesn't seemed to have happened and the market took note of that."

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