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$20 Billion 10 Year Closes At 3.21%, Bid-to-Cover At 3.01
- Yields 3.210% vs. Exp. 3.229%
- Bid to Cover 3.01 vs. Avg. 2.66 (Prev. 2.77)
- Indirect Bid To Cover 1.52
- Indirects 47.4% vs. Avg. 36.8% (Prev. 55.3%)
- Allotted at high 12.77%
- Direct bidders at 5%
The appetite for Treasuries continues to be insatiable, with increased buying both before and after the auction.
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Why should this be? What piece of this jigsaw is missing?
It isn't that 3.2% ten-year yields are attractive, but perhaps they're more attractive than the alternatives. Spreads on investment grade and high yield debt have come way down. Due to both the debt and demographics, if it weren't for government spending continuing, I would fully expect the economy to shrink over the next decade. The no to minimal growth scenario is likely. We're looking at approximately another $1T in writedowns (or more, imo) due to CRE, Alt-A, and Pay Option ARM. And that's just the U.S. Europe will definitely be increasing those amounts. That equates to ten times that amount in further credit contraction. Jobs are continuing to be shed at an alarming rate, and we're witnessing a secular shift to saving. None of that spells growth or inflation (despite the Fed deliberately trying to trash the dollar). Suddenly a risk-free 3.2% return for the next ten years doesn't look so bad. JMHO.
Stealth Fed buying. Both treasuries and stocks. Both markets should crash in the absence of Fed intervention. The "tell" or the "give" is the plummeting dollar. Now it's not so puzzling, is it?
FX market buying...foreign governments buy dollars to protect their export market...they are parking those $$ in treasuries...
Without the indirects, bid to cover is 1.5. If the Fed quits, the bond market reveals its true secrets.
The buck chucks chunks.
Another successful printing press operation, paid for in part with the proceeds of an earlier printing press operation.
I'm clearly in the wrong business.
Isn't that called "the velocity of money"? ;-)
Protection for earnings season?
Lather, rinse. Repeat.
Like I said...the market is not ramping up because of short covering rallies. Its because the fed is printing money via debt offering and the banks are buying it up and doing whatever with it and then using the proceeds to plow into the markets with the losing side of the trades being the US taxpayers in the future. There are no shorts left now...they all gone, or at least hibernating for another couple of seasons....The reason why this market is not even dropping is because there are no sellers either. The last seller who sold was on the day the unemployment numbers came out last friday, and that was early in the morning and probably regretting it. Of course there are a lot of money on the sidelines story may be true...but there are just as much Sellers on the sidelines waiting to see what unfolds and would press SELL SELL SELL on the first sign of panic. Lets see what the Fed does in terms of QE and if they stick to what they said earlier...we are gonna be screwed at one point when they start easing down on it.
Create the problem, Steer the reaction, Those who created the problem propose the solution. Manufacture cognitive dissonance. Do it over and over again.
This is the Hegelian Dialectic.
What is the Hegelian Dialectic?
http://www.crossroad.to/articles2/05/dialectic.htm
Here is some more incite into the Hegelian Dialectic if you are interested.
http://nord.twu.net/acl/dialectic.html
http://nord.twu.net/acl/evolution.html
Interesting. Didn't Bush say something like he was going to have to do something anti-capitalist in order to save capitalism?
Just replace "indirect" with "Fed" and it'll be closer to the truth.
TOTAL FARCE
instills a lot of confidence to see that our Fed and Treasury are operating a total farce
bastards
The last bubble, which I also like to call the dollar bubble. When this one bursts it aint gon' be purty.
No. The mother of all bubbles is the "Government Bubble". And the walls are growing thinner as this bastard inflates.
I'm hazarding a guess that the TBTF's are buying Treasuries (since they are Primary Dealers) in exchange for their (almost) worthless MBS and agency junk, to which the Fed is only too happy to purchase.
Until March 2010... so we're led to believe.
The sham will continue until the Fed faces selling the agency junk it has bought. Not that they will actually be "selling" it, more than "retiring" it.
well said.
will they retire it to Maiden Lane # 238?
Sometimes you just need to face the music. Even if it's rap music.
I thought the Fed was outta QE dough?
Or so they want you to think.
the fed is NEVER out of dough
The Fed still has plenty of capacity to buy Agency MBS. I don't know where they're at in the program (certainly more than half way done), but they have at least hundreds of billions $ remaining. There's bound to be a lot of "swapping" of MBS for newly issued (and recently POMO-purchased) Treasury debt.
When the final bubble bursts (US Treasurys) , all hell will beak loose.
Apparently, the Fed doesn't have to tell the truth about anything...
http://www.marketwatch.com/story/fed-wont-have-to-immediately-disclose-lending-2009-10-06?link=kiosk
FX market buying...foreign governments buy dollars to protect their export market...they are parking those $$ in treasuries...