Who Will Buy Our Debt?

(via Gortyn) There was apparently a large drop in the markets today (but they rebounded) attributed to less than stellar debt auctions in the UK and here in the US. The UK sale totally bombed, and the US sale signaled a significant drop in demand for T-Bills. This is something to keep an eye on.

The U.K. government put $2.55 billion worth of 40-year "gilt" bonds up for sale and ended up with $100 million on their hands. It was the first time since 1995 that the Brits failed to sell all the notes offered at an auction. . . .Treasury offered $34 billion worth of five-year notes. Unlike in England, the U.S. sale had more customers than product available. . . .But the bid/cover ratio -- a measure of demand for the Treasuries, which compares the number of bids to the amount of securities sold -- fell from 2.21 at the last 5-year-note sale to 2.02 today. This signals weaker demand for Treasuries -- at least at the interest rates offered. . . .The U.S. and most other nations will try to spend their way out of this recession by raising money by selling debt, like today's auction of Treasuries. This is a fine plan -- as long as there is demand for the debt.