“It feels very similar to the yen intervention in that it was something that seems like they just shot from the hip.”
“Treasury has a policy that goes back to the mid-1970s that prioritizes being regular and predictable in their communication on issuance. And granted this is not issuance, this is actually the reverse of issuance, its buybacks, but still I think the market has come to expect that those types of announcements are going to be at the refunding. They're often preceded by questions in primary dealer surveys that circulate before the refunding and are publicly available on the Treasury's website. So I am really taken aback by this.”
“Treasury may be concerned that yields are a little bit too high, but I don't think that this is going to be a net helpful thing in the long run.”
“I don't think the Treasury realizes how significant this is in how they've damaged their credibility in terms of how we can trust any announcement that they've made before.”
“The Treasury, almost to their detriment, has been very, very slow moving in the past in making adjustments to their issuance patterns, sizes of auctions. But one thing that they've been extremely consistent with up to this point is a transparent, consistent expected pattern of communication. And this is this just completely upends that pattern.”
“If the aim of this is to reduce term premium or long-end yields, I think this is an incredibly short-sighted strategy to try to do such a thing. I don't think that they appreciate what kind of premium is built into yields that is related to the idea that we're not surprised by things.”
TLT•
