Primary dealers buy fewest U.S. 7-year notes since March

NEW YORK Thu Aug 28, 2014 1:41pm EDT

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NEW YORK Aug 28 (Reuters) - Wall Street's top firms bought 30.73 percent of the $29 billion in U.S. seven-year government note supply offered on Thursday, which was their smallest purchase percentage since March, U.S. Treasury Department data showed.

The below-average purchase by the 22 primary dealers who do business directly with the Federal Reserve signaled strong demand from investment funds, foreign central banks and other investors for the latest seven-year note issue, analysts said.

Bets on more stimulus soon from the European Central Bank and safe-haven bids due to the escalating conflict in Ukraine have stoked demand for Treasuries this week.

The seven-year issue due August 2021 cleared at a yield of 2.045 percent, slightly below what traders had expected. It was also the lowest yield in three auctions.

Thursday's seven-year Treasuries auction was the last of this week's $93 billion of coupon-bearing government debt supply. The Treasury sold $29 billion in two-year notes on Tuesday and $35 billion in five-year notes on Wednesday, when it also auctioned $13 billion in two-year floating-rate notes.

Foreign central banks and other indirect bidders bought 48.84 percent of the latest seven-year issue, which was their biggest share since April.

The U.S. Treasury awarded large investment funds, smaller bond dealers and other direct bidders 20.43 percent of the latest seven-year Treasuries supply, which was their biggest share in three months. (Reporting by Richard Leong; Editing by Chris Reese)

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