JP Morgan strategists say Thursday’s U.S. Treasury repo accepted a wider range of securities and cleared below the operation’s cap, suggesting bid quality has weakened versus recent operations. Submitted bids remained near recent lows and the bid-to-cap ratio fell to the lowest level since the repo program began. The Treasury bought $5.2bn of longer-dated notes, below the $6.0bn maximum. JP Morgan also notes the U.S. is running a roughly 6% budget deficit despite near-full employment and says th

JP Morgan strategists say Thursday’s U.S. Treasury repo accepted a wider range of securities and cleared below the operation’s cap, suggesting bid quality has weakened versus recent operations. Submitted bids remained near recent lows and the bid-to-cap ratio fell to the lowest level since the repo program began. The Treasury bought $5.2bn of longer-dated notes, below the $6.0bn maximum. JP Morgan also notes the U.S. is running a roughly 6% budget deficit despite near-full employment and says the issue will not be resolved without substantial fiscal consolidation.