Investors are plowing cash into new U.S. Treasuries at a record pace, making economic growth rather than budget austerity a key issue as President Barack Obama and Mitt Romney face off in November’s presidential election.
Bidders offered $3.16 for each dollar of the $1.075 trillion of notes and bonds auctioned by the Treasury Department this year as yields reached all-time lows, above the previous high of $3.04 in all of 2011, according to data compiled by Bloomberg. The so-called bid-to-cover ratio was 2.26 from 1998 to 2001 when the nation ran budget surpluses.
Even as Romney and fellow Republicans assail Obama for presiding over the increase of U.S. publicly-owned debt to $10.5 trillion from $5.75 trillion in 2009 amid the worst financial crisis since the Great Depression, the bond market is showing growing investor confidence in the safety of dollar assets.
“The perceived stability of the U.S. financial system, where you have an active and aggressive Federal Reserve, and a broad $15 trillion-plus economy means the U.S. is going to continue to be regarded as a deep, liquid, strong area to invest in,” Rick Rieder, chief investment officer of fundamental fixed income at New York-based Blackrock Inc., which manages $3.68 trillion, said in a June 29 telephone interview. “Rates are going to stay low for a long time.”