In addition, there has been a raft of up in coupon trades which have worked to the detriment of 4s which are 1/4 point lower.
Originator selling has been light and one email writer used a great verb as he described the Federal Reserve as "policing" the coupon stack.
Treasury Buyback (as of July 1st, 2009)
The Open Market Desk purchased $ 3billion of securities in the August 2019 through February 2026 sector. Dealers had offered $ 9.4 billion
There was some modest disappointment at the size. One trader suggested that the street was anticipating $ 3.5 billion.
The same trader noted that the Federal Reserve owns 35 percent of several issues in the sector and that led them to buyer a broader swath of the sector instead of concentrating in just a couple of bonds.
More Corporate Bonds (as of July 1st, 2009)
The cash market for corporate bonds remains on pause. One salesman ( and steadfast friend of the blog) avers that an appreciable shift in the economic climate will be necessary to move bonds significantly from current levels.
He cited the somewhat tepid performance of the Oracle deal as evidence that the market is fully priced.
Lat week Campbell Soup issued a 5 year bond at T+ 87.5 basis points. The bond traded yesterday around that level and a current quote is 95/85. There are buyers of quality investment grade corporate bonds and they are still viewed as desirable assets but the easy money has been made and it will take a change in the economic climate to foster a sharp break fromm these levels.
