Treasury 2 year note auction does not stir stocks

Markets were little moved by the auction for 2 year notes. Dow & NAZ pretty much broke even (literally, Dow down 16 & NAZ off 1) while advancers nudged ahead of decliners. Banks recovered some of yesterday's losses but remain at the bottom of their trading range for the last 2 months.

S&P 500 FINANCIALS INDEX

Value 155.01

Change 2.61

% Change 1.7%

The Alerian MLP Index fell another 2 to the 211s. Below is a chart for Enbridge Energy (EEQ, the stock version of the units) which has had a major drop (along with the index) in the last few weeks, falling 71¢ today. Their stock recovered 17 from its recent low at the end of 2008, but has given up 6 in the last few weeks. REITs & junk bond funds were little changed & Treasuries had gains (bringing lower yields) after the 2 year auction.

Enbridge Energy (EEQ) -- 3 months




The $40B auction in two-year US notes drew excellent demand with increased speculation that the Federal Reserve will keep interest rates steady in 2009. The auction drew the most bids for a two-year sale since Sep 2007 as the class of investors (including foreign central banks) took the biggest share.

The 10-year note yield fell 5 basis points to 3.64% & the two-year's yield declined 4 basis points to 1.10%. The two-year notes drew a yield of 1.151%, significantly lower than the 1.202% average estimate. The bid-to-cover ratio was 3.19X vs 2.94X at the May 26 sale (then the highest in almost 2 years). It averaged 2.48X for the past 10 sales. Indirect bidders (including foreign central banks) purchased 68.7%, vs 54.4% at the May sale (then the most in almost 3 years). Tomorrow's auction of $37B in five-year notes tomorrow & $27B in seven-year notes on Thurs may not go as well because investors will be committing for a longer period of time..

Treasuries Rise as Two-Year Notes Draw Strong Demand at Sale

Oil rebounded nicely, but that did not help MLPs.

CLQ09.NYM

..Crude Oil Aug 09

..69.17

.. 1.67 ......(2.5%)

Today was one of those nothing days in the markets. The president had a news conference, but that did not influence trading. Tomorrow the FED will issue their release in the PM which will generate a lot of comments.

Dow Jones Industrials --- YTD