US Treasury sets record $123 bln bond auction week

The U.S. government announced a record volume of $123 billion worth of bond auctions next week, which came at the high end of some analysts' expectations but caused no major market ructions.


The figure beats the previous record of $115 set in July and includes two-, five- and seven-year notes in tandem with an offering of previously issued five-year Treasury Inflation Protected Securities.
Upside surprises came in a slightly larger-than-expected seven-year note sale of $31 billion and a chunkier TIPS offering of $7 billion.

The government will also sell $44 billion of two-year notes, and $41 billion worth of five-year notes.
Treasury debt prices took the announcement in stride, remaining steady at lower levels on the day US10YT=RR.

Investors have kept a close eye on U.S. debt auctions this year in light of the government's burgeoning budget deficit. During a brief period in May some questioned the longevity of the United States' prized AAA rating.

The U.S. budget deficit hit a record $1.4 trillion in the fiscal year that ended on Sept. 30 as the deep recession and a series of bank rescues cut a gaping hole in public finances.

In terms of the economy, the budgetary shortfall amounted to 10 percent of total U.S. economic output, the most for any budget shortfall since World War Two, and the White House has forecast deficits of more than $1 trillion through fiscal 2011.

- Via Reuters