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Coin Stories with Natalie Brunell
James Lavish: Disaster in Bond Market Auction, Chinese Bank Hack, Bitcoin Price and ETFs
Nov 10, 2023
45:50
Snipd AI
James Lavish, CFA with 25 years of institutional investment and risk management experience discusses a disastrous bond market auction, Chinese bank hack, bitcoin price, and ETFs. Topics covered include recent Fed and Treasury announcements, understanding treasury auctions, and bitcoin's response to recent events.
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Quick takeaways
- The recent Treasury auction of 30-year bonds had worrisome outcomes, indicating weakened demand and potential funding challenges for the Treasury.
- Bitcoin's recent price surge has not been directly correlated with liquidity in traditional markets, but the approval of spot-based Bitcoin ETFs could bring additional liquidity, stability, and broader participation in the Bitcoin market.
Deep dives
The Treasury's auction results were concerning
The recent Treasury auction of 30-year bonds had some worrisome outcomes. The bid-to-cover ratio, which measures demand, was below average, signaling weakened demand. Foreign bidders' participation dropped to the lowest level since 2021, further highlighting the decline in foreign demand for US Treasuries. The tail, the difference between the expected yield and the actual yield, was 5.3 basis points, the worst in 10 years, indicating that the Treasury had to offer more yield to attract buyers. Additionally, primary dealers were left with a significant portion of the auction, approximately 25%, showing a lack of investor interest. These results indicate a potential challenge for the Treasury in funding the growing deficit.
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Discover
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