Treasury note fever

Demand was high yesterday as Spain issued its latest round of 12- and 18-month Treasury notes. Bids for this debt have not been this strong since January 2012. The treasury sold 5.755 million euros, which was more than the 5.5 million that was expected, at interest rates of 1.47% for 12-year notes and 1.68% for 18-month notes.

People are buying up treasuries now that the Bank of Spain has limited yields on cash deposits, promissory notes and bonds to 1.75% and investors look elsewhere for higher yields.

The Treasury could pat itself on the back after a second successful debt issuance, but it will likely stay calm and hope that the trend continues as euro zone risks die down and the United States tries to stabilize its economy.