In For The Duration

Bloomberg’s discussion of today’s 30-year bond auction:

After two soft auctions earlier in the week, expectations were on the negative side going into today’s 30-year bond auction where, however, results proved very strong. Coverage, at 2.69, is the strongest since the February 2013 auction. Bidding was tight as the high yield of 3.444 percent is more than 2 basis points under the when-issued bid at the bidding deadline. Dealer takedown, at only 27 percent of the $13 billion, is the lowest on record, reflecting a sudden surge in demand from buy-and-hold accounts. Demand for Treasuries is on the rise following today’s results.

Well, yeah. The growth meme is dying the death of a thousand cuts. And people need duration, common sense is starting to penetrate the thick skulls of pension funds that the old way of matching bond maturity to actuarial pension obligations used to work pretty well. Wall Street had its own interests in mind when it persuaded pension trustees to abandon bonds, with the result that there is a legion of pissed-off retirees out there.

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