Treasury Bond Auction - Warning Signals

By Wes Goodman
March 5 (Bloomberg) -- Treasuries fell for a third day on speculation the government will announce it plans to sell $60 billion of notes and bonds next week, raising record amounts as it tries to snap the recession.

“We’re buckling underneath this supply,” said Theodore Ake, head of U.S. Treasury trading in New York at Mizuho Securities USA Inc., one of 16 primary dealers that trade with the Federal Reserve. “Right now the camel’s back is cracking. Rates should be lower, but there’s a massive deficit that we are going to have to fund,” he said yesterday.

Commentary: Look at the size of these weekly bond auctions by the Treasury department.

94 billion last week + 60 billion this week averages to 77 billion x 52 weeks per year = $4.004 Trillion Treasuries that need to be sold to finance US Government spending.

All I ask is this - can we reasonably expect enough buyers to come to the table to finance a $300 billion a month spending habit??

Coming soon to a news channel near you: "US Government Bond Auction Failure"