3-year bonds
https://www.ft.com/content/f3f56754-e12a-11e8-8e70-5e22a430c1ad
Quote:
Primary dealers, responsible for bidding on a pro-rata share of each auction to ensure the debt is sold, walked away with 47.9 per cent of the securities, above a recent auction average of 44.1 per cent, as other investors backed away.
End Quote.
30-year bonds
https://www.ft.com/content/752b0a68-e2bb-11e8-8e70-5e22a430c1ad
Quote:
The weak demand left primary dealers, who are responsible for bidding on a pro-rata share of each auction to ensure the debt is sold, taking home 38.1 per cent of the sale, above a recent average of 27.3 per cent.
End Quote.
How do we know that there are fewer buyers participating in the US bonds auction? Well, we just need to look at the pro-rata share of the auction to determine the increase or decrease of foreign buyers.
This is just a simple mathematics logic.
When the denominator (the number of buyers) gets smaller, the pro-rata figure will get bigger. Therefore, a high the pro-rata figure denotes a lacklustre buyer's interest because fewer buyers participate in the auction.
Example:
1/100 = 1%
1/50 = 2%
1/25 = 4%
From the figures above, if the number of buyers reduces from 100 to 25, the pro-rata figure will increase from 1% to 4% because the denominator gets smaller.
