Archived IMT (2009.07.30)

The UPCOMING 7-YR TREASURY AUCTION (due in 30 mins) faces a high bar of expectations since last months 7-yr auction drew a stronger bid-to-cover ratio of 2.82 compared to 2.26 in May. The participation from indirect bidders was also at a high 67%. Thus, todays auction needs to beat these numbers in order to avoid making a trifecta of disappointments following the 2-yr and 5-yr auctions of the last 2 days. The 7-year could also have a greater impact on 10-year yields from a maturity stand point, which could risk a fresh run-up towards the 3.80s%, potentially at the expense of the greenback. With evidence of Asian investors moving towards the shorter end of the yield curve, today's 7-year auction risks a disappointing subscription.