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1 Month Bill: -0.005%... Again

Tyler Durden's picture




 

When we observed the 1 month Bill auction yesterday which priced at a 6 week high of 0.002% we speculated, incorrectly, that the market may be starting to get concerned about the whole debt ceiling thing (which has 8 days until the legislative D-Day of July 22), especially following the John Boehner quote just carried by AP that "there is no guarantee of a debt limit raise if no deal by August 2." And yes, the deadline by which Congress has to pass this law is 10 days prior. But anyway: as of minutes ago, this 4 week bill which saw some "weakness" yesterday is back  to where it was a week ago: -0.005%. Translation: Uncle Sam will gladly take your money to take your money.

 

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Wed, 07/13/2011 - 15:24 | 1453147 kito
kito's picture

u.s. budget gap declined in june..you see, the federal govt is taking responsibility and spending less ;)

http://www.bloomberg.com/news/2011-07-13/u-s-budget-deficit-narrowed-to-43-1-billion-in-june-on-slower-spending.html

Wed, 07/13/2011 - 15:26 | 1453160 TheTmfreak
TheTmfreak's picture

I'm sure if you look into that, it will be similar ot the budget cuts they had. Meaning, maybe there is a few million less, and just accounting tricks that won't be held accountable, make up the rest.

Wed, 07/13/2011 - 15:59 | 1453298 Max Fischer
Max Fischer's picture

All this political posturing by Washington charlatans is nothing more than cheap kabuki theatre by D-level drama queens. By instituting faux debt limits which expire every year, Democrats and Republicans can point guns at each other, and get all sorts of last-minuted concessions and loopholes passed that wouldn't otherwise - every year this happens. It's much easier to negotiate and get bad legislation passed when you've got a gun at your opponents head. 

In reality, the bond market will impose the debt ceiling when it wants, regardless of Washington's transparent politics and all-to-familiar feigned concern for America's future.

- Max Fischer, Civis Mundi

 

Wed, 07/13/2011 - 19:07 | 1454049 Gooserooster
Gooserooster's picture

I'm impressed by your post.  I didn't think of it this way, but your absolutely correct.  If there wasn't this "crisis" of the debt cieling, it would be harder to get certain legislation passed.  Like Rahm Emanuel said, "never let a crisis go to waste".  By your analysis, the government creates this "debt cieling" crisis in order to get otherwise unpassable legislation passed.  Good thinking.

Wed, 07/13/2011 - 15:28 | 1453170 Sudden Debt
Sudden Debt's picture

maybe they forgot the send out the SS checks?

Wed, 07/13/2011 - 15:24 | 1453150 Ancona
Ancona's picture

I am amazed that anyone will still buy this shit.

Wed, 07/13/2011 - 15:27 | 1453164 TheTmfreak
TheTmfreak's picture

I'm actually still kind of scratching my head to this situation. Anybody have a "real" or plausible answer to this?

Wed, 07/13/2011 - 15:33 | 1453189 SheepDog-One
SheepDog-One's picture

Sure, seems to me big money is willing to park for the month with the guarantee of only a -.05 loss. Bad stuff.

Wed, 07/13/2011 - 16:50 | 1453534 RockyRacoon
RockyRacoon's picture

Well, there goes the argument against gold that it pays no interest...

Wed, 07/13/2011 - 19:13 | 1454068 Gooserooster
Gooserooster's picture

good point.  Now we can say that bonds are a "Stale" asset...because they don't earn a return.  That whole argument about gold being a bad holding because "it doesn't provide a return" was bogus anyhow.

U.S. dollars don't earn a return either.  Dollars only earn a return when lent out, or invested in a return generating investment. 

 

Gold does earn a return when it's lent out, just like dollars, yen, pounds, whatever.  That argument was always just a red herring for the weak minded.

Thu, 07/14/2011 - 08:48 | 1455522 Tidewater
Tidewater's picture

Yes, always strikes me as a hollow argument, meant to resonate with a retired day-trader in a VectorVest commercial. Commodities don't pay interest. Or dividends. Most stocks don't pay dividends either, and never will. And bond yields have been going down for 30 years. Got it.

That said, I was shocked to learn that I can't eat gold... That argument really does resonate with me. Because the first thing I look for in any investment vehicle is that it be food.

Wed, 07/13/2011 - 15:52 | 1453267 ThirdCoastSurfer
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Answer: 

“Two adjustments to the estimated subsidy cost of loans and loan guarantees made in previous years reduced outlays by roughly $21 billion this June,” the CBO said in a budget estimate released July 11. -Bloomberg

Wed, 07/13/2011 - 15:45 | 1453242 Mae Kadoodie
Mae Kadoodie's picture

"...aand it's gone.  Thank you.  Next?"

Wed, 07/13/2011 - 15:25 | 1453155 Sudden Debt
Sudden Debt's picture

it even goes up when the FED itself is buying...

Wed, 07/13/2011 - 15:26 | 1453161 Danks18
Danks18's picture

Possible QE3 moved the S&P for 5 hours before it gave it up.  Diminishing returns anyone?

Actually check that.  At least they were able to ruin the dollar for the day.  Nice work BB.

Wed, 07/13/2011 - 15:26 | 1453162 carbonmutant
carbonmutant's picture

Are equities that bad?

Wed, 07/13/2011 - 15:33 | 1453187 Josh Randall
Josh Randall's picture

They are when one can't use logic or economic principles to get it right anymore. This is the time to start the Short Selling JPM train again - it's at $39 and change; Silver at $38 and change and climbing.

Wed, 07/13/2011 - 15:28 | 1453171 RobotTrader
RobotTrader's picture

The thirst and lust for Uncle Gorilla Notes is now entering bubble phase.

Never before have I seen such a unquenchable thirst for Fiat Notes.

Heh, the 10-year auction went out huge today, only 1 out of 3 bidders were lucky enough today to own 10-yr. Gorilla Notes that pay a paltry 2.89%.

Wed, 07/13/2011 - 15:35 | 1453199 kito
kito's picture

so robo, how much longer before this bubble pops?

Wed, 07/13/2011 - 15:36 | 1453208 baby_BLYTHE
baby_BLYTHE's picture

The thirst for the blood of counterfeiters is swelling to all time highs.

The Money Printer just might have pushed it over the edge today basically guaranteeing another round of dollar destruction.

Wed, 07/13/2011 - 15:46 | 1453243 Vic Vinegar
Vic Vinegar's picture

C'mon now - some of us aren't that thristy.

Wed, 07/13/2011 - 15:51 | 1453260 lieutenantjohnchard
lieutenantjohnchard's picture

the reason for your surprise is that for your history goes back 90 days. many of the rest of us have seen the movie before.

Wed, 07/13/2011 - 15:29 | 1453175 RobotTrader
RobotTrader's picture

How about investing $100,000 in a 1-yr. Treasury and you get the grand pleasure of earning a whopping $150/yr.???

LOL.....

Wed, 07/13/2011 - 15:41 | 1453230 Internet Tough Guy
Internet Tough Guy's picture

Finally a thread you can post on, Momo? Gold soaring, you must be puking up blood. Less than 100 to go before you get to apologize to General Jim. LOL

Wed, 07/13/2011 - 16:49 | 1453519 thepsilocircus
thepsilocircus's picture

While I like your reply to momofader ITG, I thought we had already established that he is some kind of script/software/copy-paste troll bot?

 

Isn't it obvious when he never replies to comments, constantly contradicts himself and makes random, nonsensical comments?

Wed, 07/13/2011 - 15:49 | 1453255 lieutenantjohnchard
lieutenantjohnchard's picture

the contract 1099 processor's portfolio is hemorrhaging red today:

mo down: check

vz down: check

hd still trading in its 1% exponential band: check

robo changing the subject from yesterday's typical snide remark about the s&p pulling silver and gold up: check

as ever, gentleman jim sinclair sends warm regards to you and hopes that one day you'll be able to wear a man's pair of pants rather than your widows and orphans skirt portfolio.

Wed, 07/13/2011 - 15:29 | 1453176 chistletoe
chistletoe's picture

weird.

 

everything is giving up its gains except one thing ...

 

(who was that maasked man?  look, he left behind a bullet ......)

Wed, 07/13/2011 - 15:30 | 1453182 treemagnet
treemagnet's picture

No wonder Turbo and Ben feel so smug - they can charge for the privelage of fucking people over now.  Fucking gangsters.

Wed, 07/13/2011 - 15:31 | 1453185 carbonmutant
carbonmutant's picture

Tomorrow's Numbers...

Core Retail Sales m/m   
PPI m/m
Retail Sales m/m
Unemployment Claims

Wed, 07/13/2011 - 15:32 | 1453188 Cheesy Bastard
Cheesy Bastard's picture

I got it all in matresses.  Or I spent it all on madrases.  Who the hell can remember?Ah, what difference.

Wed, 07/13/2011 - 15:36 | 1453196 Boston
Boston's picture

As of a few minutes ago, my brokers had NO 1-month bills on offer. 

No soup for you!

 

Wed, 07/13/2011 - 15:40 | 1453223 mmlevine
mmlevine's picture

I can't hold her Scotty.

Wed, 07/13/2011 - 15:41 | 1453226 BeerWhisperer
BeerWhisperer's picture

I will gladly pay you Tusday for a hamburger today.

Wed, 07/13/2011 - 15:42 | 1453233 Cheesy Bastard
Cheesy Bastard's picture

Uncle Scam?

Wed, 07/13/2011 - 15:59 | 1453293 RobotTrader
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attn: lieutenanantjohnchard

Poor General Jim must be pulling his hair out, his beloved TRX is still mired near the lows at $6.50, hasn't even bettered its 2006 highs of $9 when gold was trading at $650.

Meanwhile, LULU, NFLX, AMZN, AAPL, etc. have totally skied since then, even when factoring in the 2008 meltdown.  Those stocks are still 3, 5, 8 baggers from 2006 levels.

Gold itself has been a stellar investment.

Gold equities, well, that's another story.....

Wed, 07/13/2011 - 16:04 | 1453316 lieutenantjohnchard
lieutenantjohnchard's picture

meanwhile, fnm, fre, bear and leh are worth basically zero when factoring in actual prices. those stocks are grand slams from 2007 highs for shorts.

gold and silver have been stellar investments.

financials, well that's another story.

see how easy it is to cherry pick.

Wed, 07/13/2011 - 16:08 | 1453341 gkm
gkm's picture

I have to admit that take your money bit is pretty funny ZH.

Wed, 07/13/2011 - 16:27 | 1453429 slaughterer
slaughterer's picture

This auction result is reminiscent of 2008-2009, is it not?

Wed, 07/13/2011 - 16:41 | 1453494 Cole Younger
Cole Younger's picture

I am far from a bond expert. In fact I know very little about them. I have to ask why anyone would buy them? Long term, I doubt they will be worth much as we continue to bastardize the currency. Short term is even more ridiculous as they don't pay squat. I don't get it, why are people buying U.S. debt? 

Wed, 07/13/2011 - 16:48 | 1453527 Rational Psycho
Rational Psycho's picture

"there is no guarantee of a debt limit raise if no deal by August 2." And yes, the deadline by which Congress has to pass this law is 10 days prior.

Could someone explain why Congress needs to pass the bill 10 days prior to the Aug 2nd deadline? I understand the teleprompter has to sign it, but why would that take 10 days?

 

Wed, 07/13/2011 - 17:43 | 1453752 FranSix
FranSix's picture

Ok, um so where's the 'it gets worst' part?

 

I found it!!  3mo-treasury bill negative rate, according to bloomboig:

 

http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

 

So does the six-month rate go negative?  Do we have negative policy rates?  A stock market crash?

Wed, 07/13/2011 - 19:09 | 1454055 Gooserooster
Gooserooster's picture

I can't understand it.  How do you sell bonds that return less than invested?  I must be a total novice, because to me, it would seem totally impossible to sell such a thing

Wed, 07/13/2011 - 20:23 | 1454333 o2sd
o2sd's picture

The thing to understand about bonds is that, with the exception of a default, their future value (notional) is guaranteed, even if their present value (discounted) is not.

This makes them a great safe haven if you think the equities market is about to go all 1929 on you, AND/OR you are betting on deflation, in which case your future value is actually higher than the present value.

The fact that

(a) 1 month rates have gone negative (and possibly 3 and 6 month as well)

(b) there are buyers for these bonds

should tell you something about what the market thinks is about to happen. i.e. massive price deflation in traded assets (primarily equities).

This is absolutely guaranteed unless the Fed comes in with QE3-N, in which case you would have to be mad to pay to take these bonds.

So, let's put the pieces together.

-> Fed signals end of QE

-> Unemployment hits 9.2

-> Insider B/S ratio goes to 3700x

-> Bond rates go negative 

-> USG prepares to default

All of the above are deflationary, BUT, if the entitlement class lose their pensions, things could get VERY ugly.

So right now the market says 'deflation' because all the rich people have got their money out, so they can let it crash now, but if it does crash, there will be massive social unrest, which could lead to the suspension of democracy and the institution of martial law (possibly).

"May you live in interesting times!" - Ancient Chinese Curse

Thu, 07/14/2011 - 00:48 | 1455065 Taku
Taku's picture

Japan '98?

Thu, 07/14/2011 - 04:23 | 1455240 o2sd
o2sd's picture

Japan 98? The US should be so lucky. At least Japan had a positive balance of trade when it all went pear shaped in 98 (actually, foreign trade was the CAUSE of the Japanese credit bubble).

US productive capacity left for Asia/BRIC/Mexico/etc 20 years ago and US consumers have been living on borrowed money since then. I don't care who you are, it takes 10-20 years to repair that kind of damage. Once upon a time, I would have said that Americans could repair that kind of damage, but I think the cultural shift has been too great.

Once entrepreneurs, warriors and frontiersmen (and women), but now more fat, egotistical, corrupt, deluded and entitled. I hope I am wrong, but reading the comments on youtube doesn't inspire much confidence that I am.

 

Wed, 07/13/2011 - 20:36 | 1454383 Zero Debt
Zero Debt's picture

But but but it pays no dividends!!

Wed, 07/13/2011 - 22:05 | 1454696 Stuck on Zero
Stuck on Zero's picture

If you have the right credit card you can earn nearly 14% on zero percent interest T bills.  Buy the T-Bills with your credit card and you get 1% back.  At the end of 30 days collect your cash and buy the T-Bill again.  I know a few people who are doing this.  There is a Federal limit so you won't get rich, however.

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