$20 Billion 10 Year Closes At 3.51%, On 3.35% (Correction: 3.53%) Expected

Tyler Durden's picture
  • Yields 3.510% vs. Exp. 3.350%, 16 bps miss in final High vs. Exp. - Update: It appears the fine folks at Ran Squawk, where we sourced this data, had a typo (http://www.zerohedge.com/news). It would appear they had a fat finger moment and the actual number was 3.53% Exp. This is, of course, in line with the auction outcome. That said, we appreciate John Jansen's constant presence and ad revenue generation on Zero Hedge.
  • Bid-To-Cover 2.77 vs. Avg. 2.62 (Prev. 3.28)
  • Indirects 55.3% vs. Avg. 28.5% (Prev. 43.9%)
  • Allotted at high 78.40% (BBG)
  • Indirect bidder Bid-To-Cover at 1.4x

PS. For fans of Across the Curve blog, we suggest you voice your grievances with the data feed at Ran Squawk where the data was sourced.

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Assetman's picture

Hmmm... interesting.

Does this mean that the Fed is near the end of its rope on QE Treasury purchases?

Jack's picture

TD, you should retract/correct this post before CNBC notices you're trying to infringe on their inaccurate data market.


Expected was 3.53, not 3.35.  Auction went fine.

Anonymous's picture

Agreed here. It was actually a pretty good auction. No way a 16bps tail. You guys could've spun it as..."Look high demand for low risk treasuries = bad for SPY!" You'll have to correct this as it is not accurate info.

Fruffing's picture

Thx Jack, thought so...

Howard_Beale's picture

Exactly--what's the delay in the retraction/correction? It is clearly wrong.

Assetman's picture

Good to see the correction... it needed to be done.

The way to read this is that nothing has really changed.  The Fed has been pretty open about its remaining capacity on Treasury purchases under its current authorization.  And there's capacity, it appears, for a few more auctions.

Again, with the robust bid to cover from the indirect bidders, we can expect the backdoor monetizing process will continue to place pressure on the USD until the capacity is tapped out in October.

That's when the real fun begins... either the Fed finds a new bag of tricks to keep auctions from failing, or the equity markets will be sacrificed for the flight to quality trade to 2010.

TumblingDice's picture

In a couple of weeks we'll find out if sans the POMO support this would have been a failed auction. I think we already know the answer to that however.

Bad no matter how you cut it.

Mediocritas's picture

What a sad and sorry tale.

Fed == indirect these days, indirect just keeps going higher and higher. Only Fedula and his pals will play with shit.

Pretty soon they're gonna have to trigger an equity collapse to find any truly external buyers.

Assetman's picture

Oh... not if there is a "new and improved" QE 2.0 in our future.

Mediocritas's picture

No way in hell would I bet against you on that.

I predict it will fly under the guise of Stimulus 2.0 and a lot of lip-flapping from Obama

MinnesotaNice's picture

He will loose all credibility from the people who voted for him if he introduces a Stimulus 2.0... I voted for the man... but you simply cannot talk 'green shoots' and 'take credit for fixing the economy'... and then introduce another worthless stimulus... I can't even drive in my city without encountering multiple torn-up roads (which used to be perfectly good roads) that have been brought to me by the "American Recovery and Reinvestment Act of 2009"... my stimulus dollars at work.  This morning, traffic was diverted 3 times in 4 miles because of 3 separate make-work, useless projects. 

Anonymous's picture

His credibility is already loosened. This would make him fully lose it.

MinnesotaNice's picture

Funny... my typo... your play :-)

Broken_Trades's picture

I wonder what the cost is to the economy of having all those people delayed in constructions zones.  Can't be good for productivity.

Señor Tranche's picture

They'll need a serious market pullback if the government wants to push through a Stimulus 2.0.  No political will now.  That's the problem with smoking the green shoots, have to admit you fucked up if you want more. 

walküre's picture

There was some Fed chatter this morning about indefinite MBS purchases.

Isn't that a quasi admission to allow more QE?

Anonymous's picture

Yaaaay! We're going to own all of it! We'll corner the market!

Assetman's picture

Yes and no.

Yes, in the sense that the monitization of really toxic debt will continue unabated.  And perhaps, agency spreads will remain in check.

No, in the sense that the Fed will have no control over the "risk-free" rate-- and thus all other rates with risk premia-- if they don't monetize Treasuries in particular.

Wouldn't it be interesting if you had failed auctions, and a market-driven 10-year yield nearing 5.0% (since no one is really participating anyway).  I can't imagine that would be a good environment for anything credit related.

The reality is that there is still plently of capacity to buy MBS, and I would be totally shocked if that doesn't roll over into 2010.  You can call it "monetizing", but I call it as "The Fed buying crappy assets with very little residual value, with my money, that they didn't ask to use". 

"Monetizing" does sound a little more efficient, though...

walküre's picture

Do you have any understanding about OTC stock market makers? The same strategies are at play in this market here. Might even be true for debt auctions. The money is not really there, the "float" is empty but the prices / yields keep going higher.

How can this be done? Well, if nobody asks for a payout and liquidity doesn't get drained, the game can go on for a long time. It is similar to a Ponzi but worse. Everybody that gets into a Ponzi knows what it is, how it works and that eventually the thing collapses.

Markets and bonds get pumped like a penny stock. Same news, old news and fudged data to boot.


Anonymous's picture

Can we monetize all the bad and defaulting bank debt of the past AND underwrite new mortgages under the GSEs too?

I can see borrower's defaulting, moving to another location before a credit jam and getting a GSE mortgage which will ALSO probably default within 10 years.

Once you start digging, you really warm to the work.

Cindy_Dies_In_The_End's picture

It is mathematically impossible to do so.

DaddyWarbucks's picture

"but I call it as "The Fed buying crappy assets with very little residual value, with my money, that they didn't ask to use".

I like it, it has a ring to it. Do you mind if I use that?

Assetman's picture

sure... I'm sure as hell am never going to remember it. :)

Mediocritas's picture

Biggest damn land-grab since Columbus and US citizens are just sitting at home making lame YouTube vids about their credit card debt.

Dammit, I am long pitchforks and flares, when will people start buying?

Anonymous's picture

Flares?? Whatever happened to torches?

Fruffing's picture

you can shoot a flare into a gated compound

Anonymous's picture

What if they trigger an equity collapse and presumed buyers balk? or purchase the shiny instead?

Plenty o'sleep to be lost in this best of all possible worlds.

ratava's picture

Is this like really bad for the dollar? Oh yeah it is, don't even have to ask.

Anonymous's picture

Housing won't have shit on this bubble. They are making drunken sailors look like tight wads.

Fish Gone Bad's picture

... and this too will be monetized.

reading's picture

So, if they truly want anyone other than the fed to buy 10 years why don't they stop gunning the market like a rocket-propelled grenade?

jg's picture

Good job, gents, staying on top of this, highlighting the indirect bid-to-cover.

I look forward to the crash of this corrupt system, and starting anew.


Anonymous's picture

why does everyone assume they have control?

loki's picture

How long can government interfere with markets??

Why does the bottom never fall out if it?? 

I'm really bearish but I'm starting to feel foolish for being bearish...

WTF gives?

Ned Zeppelin's picture

The rush to the top of the S&P today is more likely than not providing confirmation of our ongoing short-sighted, dogmatic and clearly delusional paradigm we maintain here at ZH, and the enduring genius and wit of Dennis Kneale, to whom we should pay humble homage as our new leader. 

I know, I know - it can't be, right? I feel sick too.  But it appears to be a very possible outcome.  Massive cognitive dissonance causes synaptic circuits to overload and fade as facts and reality sheer away from one another like glaciers calving into an icy, black and unfeeling sea.  Night is day, black is white, zero is one. It is difficult to maintain faith in the face of unrelenting events so utterly divorced from conventional beliefs and understandings of cause and effect. 


MinnesotaNice's picture

Ned if you have lost faith and turned bullish then it must be time to short the markets in earnest :-)   I for one continue to have faith... the ZH philosophy is still consistent with mine... but everything just doesn't happen all at once... patience is a virtue... I moved into Canadian dollars when USD/CAD was at 1.29... then recently moved back into USD... so check that off as a great trade.  Then I bought gold under 900 spot... and its almost ready to come out of the oven... just a little longer until it gets golden brown.  Shorted stocks a little early... but I can remain solvent longer than the market can remain irrational... so have faith Ned... have faith  :-)

deadhead's picture

patience is a virtue


Cindy_Dies_In_The_End's picture

Lose faith? Come on people, its not about "loss of faith". Do your math. We know the inevitable, all its going to take is the turtle on the bottom getting tired. (for Dr. Suess fans, but all too true).

blackebitda's picture

what is the relevance of the bid to cover? i understand it is a measure

of auction demand? how do i determine if 2.77 is good or bad relative

to what, the last 10 year auction? 

Anonymous's picture

cause they buy a bunch here while its subsidiaries gun the market making their fast money and dilute for all they can get ex..ex..ex..; and when the rubber band is stretched and they are even/short the Fed pulls liquidity and the grenade falls, people will then rush back into T's and they can unload at much higher price (lower yield)...maybe allot higher price then any of us thinks possible since it will probably be rising from a much higher pace and another major liquidity drain sell off may be epic...just a guess.

Oso's picture

i think expected was "3.53"

Anonymous's picture

The housing market won't have nothing on this bubble. They make drunken sailors look like tight wads.

Assetman's picture

hmmm... that might be worth the double-check, eh?

Anonymous's picture

"The U.S. budget deficit is projected to increase to $1.85 trillion in the year ending Sept. 30, equivalent to 13 percent of the nation’s economy, according to the nonpartisan Congressional Budget Office. "

WHAT?? what's happened to - "The White House budget office will also lower its deficit forecast for this fiscal year, which ends September 30, to $1.58 trillion from $1.84 trillion."

'O' man is a liar.

DaddyWarbucks's picture

In other news the Ministry of Truth has congratulated the people on having their weekly chocolate ration increased from 200 grams to 100 grams.

Mediocritas's picture

Not so doomy after the correction. Still looking at the high indirects though as disguised Fed and wondering where the real buyers are.

Anonymous's picture

May be I was wrong in thinking that the fed will sacrifice the market for the sake of bonds?kinda strange that they let the 10 year get to 3.5%. So may be the new fed guideline to the big guns"people are better off buying the stocks than owning homes. They can live in tents for now,and when the conditions improve,they can always sell their stocks and buy homes"

Mediocritas's picture

BB is walking a real fine line on this one. The elephant in the room is still real estate derivatives, so it has to be the primary focus. They'll push China to the limit of tolerance before easing up on QE / protecting the dollar / crashing equities.

Heard a rumour today that China is going to start loading up on cheap US real estate. There's the solution...but not sure how Americans are going to like becoming the United States of China.