Treasury Auctions’ Fading Direct Bid Has Foreign Demand in Focus
- U.S. three-year note sale saw lowest direct bid since 2009
- ‘Large reserve manager lowering participation,’ NatWest says
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Weaker demand has become a feature of some recent U.S. government bond sales, and one metric in particular is raising eyebrows: the drop-off in direct bids.
This class of customer has no distinct profile -- direct bidders comprise a grab-bag of institutions and banks that can bypass the primary-dealer intermediaries at Treasury auctions. International demand is typically considered to be reflected in the indirect-bid category, but some foreign reserve managers, such as China, have gained direct access.