As US Federal Reserve closes in on rate hike, which could come as early as next week, demand for longer end treasury is showing strength going into the rate decision.
- Last night US auctioned $13 billion longer dated (30 year) treasury which showed demand was highest in three months. Treasury was able to sell the bonds as 2.98%, while market was expecting it to be as high as 3%.
- This could be due to higher demand, which as measured by bid to cover ratio climbed to 2.54. It was 2.26, when last time treasury auctioned 30 year in August.
While at one hand genuine demand remains healthy for US safe haven assets amid turmoil in China and uncertainty regarding FED's policy meeting.
30 year treasuries are likely to experience some speculative activity going into FOMC as they are likely to gain more if FED keeps interest rates steady in next week's meeting.


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