I rest my case. There’s frequent member discussion on my Telegram Channel about how US Treasuries are no longer accepted by foreign markets. Yet, the facts indicate exactly the opposite.
Just yesterday, I asked my readers to await the results of several US Treasury auctions this week.
Consequently, today’s 2-Year Treasury auction solidly shows that not only are US Debt instruments being accepted worldwide, foreign demand is at record levels.
A notable 65.3% of the auction was bought by foreign investors, termed ‘Indirects’. This is the highest percentage since the previous summer and well above the six-auction average.
So when the Guru News Network tells us that the US is bankrupt and US Treasuries are dead in the water internationally, our first action should be to simply go to the Treasury Auction website and check the facts. Nearly all financial data is publicly available as verification.
Here’s the details of today’s 2-Year Treasury Auction.
Solid Auction Signals Strong International Demand
Today’s 2-year Treasury auction highlighted a significant confidence in the US Treasuries, especially among foreign buyers.
Despite potential concerns regarding the upcoming Federal Open Market Committee (FOMC) meeting and Treasury Refunding, the auction proved successful.
Key Auction Outcomes
- Sale Amount: The US sold $60 billion in 2-year notes today (January 23, 2024).
- Interest Rate: The notes were sold at an interest rate of 4.365%. This was in line with expectations and slightly higher than last month’s rate.
- Demand: The bid-to-cover ratio was 2.571. Although this is a slight decrease from last month and below the recent average, it remains within the healthy range seen over the past decade.
Foreign Interest Peaks
- High Foreign Participation: A notable 65.3% of the auction was bought by foreign investors, termed ‘Indirects’. This is the highest percentage since the previous summer and well above the six-auction average.
- Implications: Such strong foreign participation indicates a continued trust in the stability and reliability of US Treasury securities.
Domestic Participation and Market Impact
- Direct and Dealer Participation: Direct bidders bought 19.9% of the auction, slightly below the average. Dealers took the smallest portion since the previous fall, at 14.8%.
- Stable Market Response: The auction did not significantly impact the market. The 10-year Treasury yield remained stable at 4.14% following the auction.
This recent Treasury auction underscores the strong international confidence in US Treasuries (Bills, Notes, and Bonds).
Despite some market uncertainties, the high level of foreign buyer participation reflects the ongoing appeal of US Treasury securities as a stable investment.
