Column-US bond price slide puts buyers to the test: McGeever

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Column-US bond price slide puts buyers to the test: McGeever
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Chassidy’s ultimate challenge | SaltWire #ultimatechallenge #canada #realitytvORLANDO, Florida - The latest figures showing the surprising - some would say alarming - durability of U.S. inflation are also re-focusing the spotlight on the source and strength of demand for U.S. Treasuries.

That shows a lot of downward price pressure despite what appears to be still-brisk demand for the paper, and raises questions about who is buying into this. Foreign holdings have never been higher in nominal terms, exceeding $8 trillion in the fourth quarter of last year for the first time. That's around 30% of all outstanding U.S. debt, split roughly equally between the official and private sectors.

Indeed, overall demand at Treasury bond and bill auctions this year has been reasonable. The average bid-to-cover ratio over the 14 bond auctions is 2.52, and over the $629 billion bill in sales across nine auctions it has been 2.92.Demand on the secondary market, however, is not keeping up. For yields to stop rising, in an environment of surging post-pandemic supply, the U.S. private sector will have to start buying again in size.

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