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July 26, 2017 By Peter Boockvar

Another Good Auction


5 Year Auction

After a solid 2 yr note auction yesterday, today’s 5 yr auction was good too. The yield of 1.884% was a touch below the when issued of about 1.89%. The bid to cover of 2.58 was the above the 12 month average of 2.44. Also reflecting healthy demand was the combined direct and indirect bidders took 76% of the auction, thus leaving dealers with just 24%. That compares with the one year average of 31%.

Bottom line, the message sent from the shorter end auctions this week are of the belief that the Fed is barely going to hike rates, if at all. As stated yesterday, one has to go all the way out to the June 2018 fed funds futures contract before seeing one that fully prices in just one more 25 bps rate hike. Go to June 2019 before you see one after that. Basically, the market is saying put a fork in this rate hike cycle. That said, the Fed is viewing QT as a different exercise (even though it is just another form of tightening) and we’ll hopefully see when that starts at 2pm.

Filed Under: Latest Data

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About Peter

Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.

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Disclaimer - Peter Boockvar is an independent economist and market strategist. The Boock Report is independently produced by Peter Boockvar. Peter Boockvar is also the Chief Investment Officer of Bleakley Financial Group, LLC a Registered Investment Adviser. The Boock Report and Bleakley Financial Group, LLC are separate entities. Content contained in The Boock Report newsletters should not be construed as investment advice offered by Bleakley Financial Group, LLC or Peter Boockvar. This market commentary is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction or investment strategy. The views expressed in this commentary should not be taken as advice to buy, sell or hold any security. To the extent any of the content published as part of this commentary may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. No chart, graph, or other figure provided should be used to determine which securities to buy or sell. Consult your advisor about what is best for you.

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