[Market Watch] Last week’s U.S. Treasury market volatility is raising uncomfortable questions about investor capacity for absorbing the deluge of U.S. government debt set for sale this month.Up to now, money managers have defied fears that the trillions of dollars of new debt issuance would overwhelm the market, with investors taking down record-large auctions without much fuss. But after a dismal debt sale last Thursday, analysts are re-evaluating assumptions that supply would have a limited impact on bond prices and yields.
"We have never seen before these amounts. That’s definitely a test for the Treasury market," Bastien Drut, chief thematic macro strategist at Paris-based CPR Asset Management, told MarketWatch.
Net issuance of Treasury bonds and notes are set to hit an all-time high of $414 billion in March, almost the twice of the previous record, according to Drut’s calculations.
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