China Avoids US Bond Sales

timgeithner 24march09 closeup tbi

There’s some fear out there that one of the big “shoes to drop” could be dropping — namely our massive debt and the potential unwillingness of our trading partners to keep financing it.

This week saw a series of monster bond sales–so many, in fact that buyers may be getting a stomachache.

WSJ: Tension on Wall Street trading desks began building late last week when the Treasury surprised the market with plans for a record week of sales. A Monday sale of $90 billion in Treasury bills with maturities of as much as a year went well. But China appeared absent from the following two sales, which totaled $81 billion of debt, traders say.

By Thursday morning, trading-desk heads were frantically working with clients to ensure a better fate for the $28 billion seven-year note auction. It did fare far better, allaying some concerns.

When asked about the shaky auctions, a Treasury official gave exactly the kind of answer that could assure nobody.

“We believe by maintaining the deepest, most liquid market in the world, we will continue to attract capital from a broad array of investors,” said Andrew Williams, a spokesman for the Treasury Department.

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