An analysis by a primary dealer in the U.S. Treasuries market shows that domestic banks could account for a large increase in direct bidders for government debt.
The presence of direct bidders, one of three main categories of participants at Treasury auctions, has increased during recent auctions of securities.
Primary dealers, the banks and investment firms authorized to deal directly with the government and help the Federal Reserve carry out monetary policy, have fretted over the unpredictability of the direct bid, as well as the paucity of information on the identity of the bidders.
A report from Nomura Securities analyzing the Treasury Department's investor allotments and auction data theorizes that domestic banks account for part of the increase in direct bidders. (more)
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