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$138 Billion In New Treasury Auctions Just Announced
The Fed may be well advised to consider expanding QE, especially in light of today's just issued announcement of another $138 billion in Treasuries consisting of:
- $30 billion in 26 weeks. October 5 auction date.
- $30 billion in 13 weeks. October 5 auction date.
- $39 billion in 3 years. October 6 auction date.
- $20 billion in 10 years. October 7 auction date.
- $12 billion in 30 years. October 8 auction date.
- $7 billion in 30 year TIPS. October 5 auction date.
This was, undoubtedly, also priced in.
No POMO today. That $7 billion in dry powder isn't going to do much good at this point.
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Oct. 1 2011: $138 Trillion in New Treasury Auctions Just Announced
$60 Trillion in Obama Bonds
$28 Trillion in Tim's T-bills
$50 Trillion in Benny Bucks
And yet there is consistent market demand! Let's see.. October all over again with TLT shooting to $120? I mean, people are totally willing to accept a 1.5% return over the next 10 years..
so lets take bets
does the fed quit eating its own tail w/ POMO, and risk sending bond yields soaring and prices plumetting? aka failed treasury auctions... ah but maybe they crash equities and chase everyone into Tbonds...
OR
does the fed keep eating its tail via POMO, and risk sending dollar down past 72?
OR
maybe there is option three, where fed gives money to foreign central banks to buy its guaranteed certificates of consfiscation
Scenario one is likely to occur with or without their influence, so if I was a betting man...
Option 4:
Buy back a boatload of treasuries with freshly printed B(ernanke)oG(eithner)ey Bucks
My personal enhanced version of option 1 (and one I've seen shared by several others):
- POMO/QE stop & don't re-start for a while ... and will only re-start once fear returns to justify (meaning it is successfully restored on purpose).
- Markets to be tanked intentionally to restore fear & fly demand to the least-stinky option (treasuries). So Tnote demand high; yields low. Commodities will be undesirable, due to bad economic data. Gold may hold more value relative to commods due to fear - but will not hold value relative to the dollar ($700 gold again, anyone?).
- Side (but-not-secondary) benefit is Fed fear-mongering to stave off the audit wolves. Also look for significantly higher deterministic finger-pointing at "bearish, unpatriotic blogs causing the negativism".
This is the "Lather (Bubble), Rinse, Repeat" option.
Selling treasuries lowers the supply of money, which is not prudent in a deflationary economy. There will be some mutation of QE to offset the debt issuance, or things will get fugly fast.
Well, I understand what you're saying - but the past QE isn't "gone" - it is still right there to use again (in equities, gold, oil, etc.). All they're going to do is force it to move into treasuries. Net net. AND... they need to prime the fear pump to justify more printing. I think "they" want it to get fugly fast.
The Fed is caught in a really tough spot right now. They really need to unwind the QE moves and get the balance sheet closer to normal-- or it will be really difficult to control hyperinflation down the road. Expand the Fed balance sheet even more, and you risk a real run on the dollar. The Fed is increasingly reluctant to do this.
So they are still keeping rates at zero and slowly bringing off QE. Between now and March 2010, Congress will likely need to come in with Stimulus 2.0 (as a QE mutation). During that interim period, we are likely to have a flight to quality move that will keep Treasury interest heightened. The more aggressive flight to quality, to the greater the pressure for Congress to do something.
In that respect, things will get ugly in order to support the Treasury market and the dollar. In due course, there will be another injection of liquidity. We are 1990's Japan, with a few minor differences.
well said assetman.
To be fair, it is true that they dont have that much more treasury paper on the BS as in pre-Sept08. So they would probably sell the garbage if they were going to shrink it. And they would most likely want to do this while their big risk-on play is still in effect. The trouble is that this risk on play is there mostly because they have been buying the crap.
IMO if they can accomplish this then they will try to fight any flight to quality as long as they can.
you guys are much to conventional - this will be about pushing money around until everyone is tired and starts doing something real because their standard of living has gone to hell
the world improvers want to wash you out, here's how:
option 5- the wash, spin, rinse cycle
1) crash equity market, sell into bond flight to quality
2) raise rates, crushing face value of bonds
3) use money to re pump economy and markets
4) Pray that the populace get's real and demands reform of gov't
5) if no changes repeat back to 1
will look alot like Japan except alot more pissed off people around
Given the recent flight to quality, the upcoming auctions will be a piece of cake. Why own equity whan I can own tainted (but fresh) government debt?
Yep, they still have BB's hot agency bond money which will need a home, the stock market crash money, after that?
Oh, they can still get just about anything where the risk premia are widening. Junk and corporate bonds? Why not?
Municipals? Lets see if we can engineer another Orange County. I'm sure some county in CA is on the brink...
Money markets? Let's allow another CP issuer to fail and see what happens.
The sky's the limit, as far as getting more money into Treasuries. Question is, why do it now when you can spread it among many auctions in the future?
Perfect timing for the flight to safety (oh and crush gold for good measure). Rotation time!
I've lost track of the cummulative total, aren't we almost done or is this the new normal?
MARKETWATCH: A down decade - so far.
Never fear, Quantitative Easing Man is here.
Carpet bomb the world with Tim's IOU's. That's how we're gunna win this war. Destroy the village in order to save it. Now gimme some more money so we can get on with this recovery!
The TV bubble is about to burst. With the massive buildup in TV programing over the past two decades, and all the new programming on cable and satellite, the audience cannot possibly support it all.
As a gage, I use the advertising dollars being way down, and the sports stadium attendance being way down that I have not seen since the 70's an 80's. Did you see all the empty baseball stadiums this summer? This tells me the population cannot possibly continue to support all the sports personalities, the TV personalities, and movie personalities we have today.
I told all my friends at the beginning of the summer, just take note of all the empty seats in the stadiums this summer while watching baseball. This was the first year I watched baseball just for that. Was I right or what?
Try NASCAR, used to be one of the toughest tickets on the planet. Now, whole sections of the back stretch are closed and I believe they adjust the camera angles to hide the fact.
I like NASCAR, but alas, it will be the first to die. TV is your enemy.
They are pooling their money, and one lucky sports fan will draw the grand prize winning ticket each week to a seat in the bar of the new Dallas Cowboys stadium. You know, the one with the cheerleaders dancing in cages hung from the ceiling and where the players have to run thru to get from locker room to field and visa versa.
I can't wait until some 350lb lineman runs over a drunk bar patron on the way to or from the field. Do you think everyone who buys a Cowboy's stadium ticket actually reads the (4 point font) disclaimer on the back?
Ding Dind Ding.
And the sheeple are also pooling their money to hand over multi tens of million dollar contracts to their favorit idols.
Bahh. Next you'll be saying that CIS Miami, New York, Lost Angeles, Chicago is too much!!!
No way. People will watch that same formula.
"Fed's Bernanke says this year and next year, budget balance not at all feasible, important to have credible plan to reduce deficit."
By important, does he mean it is important to turn the ship hard right to avoid the iceberg important, or it is important to lower your cholesterol and eat lots of fiber important?
Treasury auctions over the next few months will give us an indication, but I am guessing iceberg important.
Disintermediation. Robbing credit from private business and labor to feed the government business and labor ( or whatever it is that government union employees do).
Dump equities to fund treasuries then purchase 60 to 70% of the auction .The dog that chases his own tail,then eats his own crap.
That's a very eloquent way of putting things, anon.
Soon trillion dollar bearer bonds will be showing up in Chiasso.
Bizarro world has confirmed the good news regarding latest auctions. USD +0.22.
Well, they have to have some way to pay for propping up the market yesterday afternoon. Gee, they can't make it any more obvious that they had to help out old 3Q!
Isn't it about time for GS to release tomorrows UE numbers. Say maybe only -100K?
Option 5 - nationalize gold again
Look to the Treasury to take advantage of the delevering we are seeing by floating as much toxic poopie at low yields as they can...until the race to the exits stops in equities. This is all ending really, really badly
"This is all ending really, really badly"
For whom ?
Does anyone know where to fin information on how many treasury securities are maturing next week? Maybe see the interest on bonds that the Treasury has to pay next week as well.
Wow, that is awful close to the $134 Billion in mystery bonds that some Japanese looking characters tried to sneak unto Switzerland:
http://newsusa.myfeedportal.com/viewarticle.php?articleid=346