Bond bulls who enjoyed a rare rally in short-term Treasuries last week might not want to get too comfortable: the world’s biggest debt market is about to be inundated with an unprecedented wave of issuance.
The US Treasury will probably auction about $294 billion of bills and notes this week, its largest slate of supply ever. The $30bn two-year note sale is the biggest since 2014, and comes as the maturity posted just its fourth weekly gain in the last six months. The three and six-month bill offerings remain at record sizes.
It’s a pivotal moment for traders gauging a Treasury market that appears to be range-bound after yields set multi-year highs in recent weeks. Jerome Powell’s first meeting as Federal Reserve chairman largely signalled continuity with Janet Yellen’s gradual path. That makes the market’s reception of swelling US issuance a key to determining whether the bond selloff will resume.
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“These larger auctions are more difficult to digest,” said Thomas Simons, a money-market economist at Jefferies. “But the auctions do OK when they have a concession. It’s even more necessary than it was in the past.”
While there’s evidence of weakening demand for US auctions, an analysis of trading data is mixed at best about whether that portends further losses in Treasuries. But the threat of diminished interest and higher yields comes at a precarious time, with budget deficits climbing and the Fed paring its balance sheet.
US financing needs are growing partly as a result of the tax overhaul. The Treasury is ramping up sales of shorter-term debt, like the maturities to be issued this week, while longer-dated obligations are growing at a slower pace.
The $35bn of five-year notes and $29bn of seven-year debt each match the largest offerings of the maturities since January 2016. In contrast to auctions in recent months, however, this week’s batch comes as the selloff has stalled.
The five-year sale last month yielded 2.658 per cent and the seven-year 2.839 per cent. The yields ended Friday at 2.6 per cent and 2.74 per cent, respectively. If the five-year sale yields less than in February’s auction, it would mark the first drop since August.
Of course, traders may build in a concession to take down the issuance, pushing yields at auction above their multi-year highs.
The results may help investors figure out whether last week’s rally was an aberration in a market otherwise dominated by rising short-term yields and a flattening curve.
Poacher
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COMPANY PROFILE
Company name: BorrowMe (BorrowMe.com)
Date started: August 2021
Founder: Nour Sabri
Based: Dubai, UAE
Sector: E-commerce / Marketplace
Size: Two employees
Funding stage: Seed investment
Initial investment: $200,000
Investors: Amr Manaa (director, PwC Middle East)
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
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Warn others to prevent further harm
Courtesy: Crystal Intelligence
Miss Granny
Director: Joyce Bernal
Starring: Sarah Geronimo, James Reid, Xian Lim, Nova Villa
3/5
(Tagalog with Eng/Ar subtitles)
The%20Roundup
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Teams
Punjabi Legends Owners: Inzamam-ul-Haq and Intizar-ul-Haq; Key player: Misbah-ul-Haq
Pakhtoons Owners: Habib Khan and Tajuddin Khan; Key player: Shahid Afridi
Maratha Arabians Owners: Sohail Khan, Ali Tumbi, Parvez Khan; Key player: Virender Sehwag
Bangla Tigers Owners: Shirajuddin Alam, Yasin Choudhary, Neelesh Bhatnager, Anis and Rizwan Sajan; Key player: TBC
Colombo Lions Owners: Sri Lanka Cricket; Key player: TBC
Kerala Kings Owners: Hussain Adam Ali and Shafi Ul Mulk; Key player: Eoin Morgan
Venue Sharjah Cricket Stadium
Format 10 overs per side, matches last for 90 minutes
Timeline October 25: Around 120 players to be entered into a draft, to be held in Dubai; December 21: Matches start; December 24: Finals
If you go
Flights
Emirates flies from Dubai to Phnom Penh with a stop in Yangon from Dh3,075, and Etihad flies from Abu Dhabi to Phnom Penh with its partner Bangkok Airlines from Dh2,763. These trips take about nine hours each and both include taxes. From there, a road transfer takes at least four hours; airlines including KC Airlines (www.kcairlines.com) offer quick connecting flights from Phnom Penh to Sihanoukville from about $100 (Dh367) return including taxes. Air Asia, Malindo Air and Malaysian Airlines fly direct from Kuala Lumpur to Sihanoukville from $54 each way. Next year, direct flights are due to launch between Bangkok and Sihanoukville, which will cut the journey time by a third.
The stay
Rooms at Alila Villas Koh Russey (www.alilahotels.com/ kohrussey) cost from $385 per night including taxes.