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Today, one of the few days in a month that had a two consecutive day improvement in the treasury market
The 30 yr $11B auction this afternoon saw very strong demand; the yield came at 3.64% with a strong cover of 2.40 and indirect bidders (foreign investors) took down 46.17% of it. The result shot rates lower across the curve for about an hour before they fell back again to levels prior to the auction. Next scheduled supply binge comes in two weeks with 2 yr and 5 yr notes. Estimates are that Treasury will have to triple the amount it borrows this year.
Two more warehouse lenders closing their doors after the horse left. Guaranty Bank, Dallas, one of the nation's largest warehouse lenders to non-banks, is reportedly telling customers that it will not renew their lines. PNC, owner of National City has pulled the plug on National City's warehouse lending operation, giving non-banks that borrowed from the unit 12 to 18 months to find new lenders.No word however, whether PNC is pulling out, they were one of the biggest warehouse lenders during the day. Banks seem to always go in the wrong direction; warehouse lending now, with all the tight underwriting and much higher quality loans being generated, should be a business to be in----obviously on a selective basis.
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