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$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 ( 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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Wed, 09/09/2009 - 13:13 | 63659 Assetman
Assetman's picture

Hmmm... interesting.

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

Wed, 09/09/2009 - 14:42 | 63855 Jack
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.

Wed, 09/09/2009 - 14:49 | 63876 Anonymous
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.

Wed, 09/09/2009 - 15:28 | 63972 Fruffing
Fruffing's picture

Thx Jack, thought so...

Wed, 09/09/2009 - 15:30 | 63977 Howard_Beale
Howard_Beale's picture

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

Thu, 09/10/2009 - 01:14 | 64695 Assetman
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.

Wed, 09/09/2009 - 13:15 | 63663 TumblingDice
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.

Wed, 09/09/2009 - 13:16 | 63664 Mediocritas
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.

Wed, 09/09/2009 - 13:16 | 63669 Assetman
Assetman's picture

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

Wed, 09/09/2009 - 13:19 | 63674 Mediocritas
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

Wed, 09/09/2009 - 13:40 | 63726 MinnesotaNice
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. 

Wed, 09/09/2009 - 14:08 | 63800 Anonymous
Anonymous's picture

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

Wed, 09/09/2009 - 14:32 | 63853 MinnesotaNice
MinnesotaNice's picture

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

Wed, 09/09/2009 - 15:14 | 63950 Broken_Trades
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.

Wed, 09/09/2009 - 14:06 | 63795 Señor Tranche
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. 

Wed, 09/09/2009 - 13:29 | 63707 walküre
walküre's picture

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

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

Wed, 09/09/2009 - 13:38 | 63719 Anonymous
Anonymous's picture

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

Wed, 09/09/2009 - 13:39 | 63722 Assetman
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...

Wed, 09/09/2009 - 14:00 | 63779 walküre
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.


Wed, 09/09/2009 - 15:33 | 63978 Anonymous
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.

Wed, 09/09/2009 - 16:32 | 64068 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

It is mathematically impossible to do so.

Wed, 09/09/2009 - 19:37 | 64325 DaddyWarbucks
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?

Thu, 09/10/2009 - 00:44 | 64685 Assetman
Assetman's picture

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

Wed, 09/09/2009 - 13:41 | 63730 Mediocritas
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?

Wed, 09/09/2009 - 13:55 | 63764 Anonymous
Anonymous's picture

Flares?? Whatever happened to torches?

Wed, 09/09/2009 - 15:30 | 63976 Fruffing
Fruffing's picture

you can shoot a flare into a gated compound

Wed, 09/09/2009 - 15:28 | 63973 Anonymous
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.

Wed, 09/09/2009 - 13:22 | 63686 ratava
ratava's picture

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

Wed, 09/09/2009 - 13:39 | 63723 Anonymous
Anonymous's picture

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

Wed, 09/09/2009 - 13:23 | 63689 Fish Gone Bad
Fish Gone Bad's picture

... and this too will be monetized.

Wed, 09/09/2009 - 13:24 | 63693 reading
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?

Wed, 09/09/2009 - 13:25 | 63695 jg
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.


Wed, 09/09/2009 - 13:28 | 63704 Anonymous
Anonymous's picture

why does everyone assume they have control?

Wed, 09/09/2009 - 13:36 | 63716 loki
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?

Wed, 09/09/2009 - 14:11 | 63810 Ned Zeppelin
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. 


Wed, 09/09/2009 - 14:24 | 63833 MinnesotaNice
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  :-)

Wed, 09/09/2009 - 14:46 | 63870 deadhead
deadhead's picture

patience is a virtue


Wed, 09/09/2009 - 16:35 | 64073 Cindy_Dies_In_T...
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).

Wed, 09/09/2009 - 13:27 | 63702 blackebitda
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? 

Wed, 09/09/2009 - 13:35 | 63715 Anonymous
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.

Wed, 09/09/2009 - 13:37 | 63718 Oso
Oso's picture

i think expected was "3.53"

Wed, 09/09/2009 - 13:45 | 63735 Anonymous
Anonymous's picture

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

Wed, 09/09/2009 - 13:46 | 63738 Assetman
Assetman's picture

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

Wed, 09/09/2009 - 13:49 | 63741 Jack
Jack's picture

Hur hur, I think you are correct.


The original post doesn't really stand then.


Wed, 09/09/2009 - 14:10 | 63806 Anonymous
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.

Wed, 09/09/2009 - 19:41 | 64330 DaddyWarbucks
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.

Thu, 09/10/2009 - 11:22 | 64924 andy55
andy55's picture


Wed, 09/09/2009 - 16:27 | 64058 Mediocritas
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.

Wed, 09/09/2009 - 13:39 | 63725 Anonymous
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"

Wed, 09/09/2009 - 16:33 | 64065 Mediocritas
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.

Wed, 09/09/2009 - 13:48 | 63746 Anonymous
Anonymous's picture


I don't think you are alone in this. Remember, markets can remain irrational far longer than you can remain solvent, as Mr Keynes once remarked. Only this time we have irrational markets and manipulators par extraordinaire. Only the Almighty knows what will happen, and I bet he's confused.

Wed, 09/09/2009 - 16:06 | 64031 loki
loki's picture

Thanks, Anon.

It's just frustrating and annoying.   I can't help but feel it really is being manipulated insanely and the tables tilted against the average investor.

Wed, 09/09/2009 - 13:53 | 63763 Anonymous
Anonymous's picture

My notes have the 10 year at 3.525 just prior to the auction. Did you hire a headline writer from CNBC?

Wed, 09/09/2009 - 13:57 | 63767 crzyhun
crzyhun's picture

Let's see what the Beige bk says....the auction was passable. For things to rattle the auction would have to be really bad.

Wed, 09/09/2009 - 14:00 | 63777 Anonymous
Anonymous's picture

better make a post about Chinese decreasing their holdings of USTs by $25B in one month

Wed, 09/09/2009 - 14:02 | 63786 Bearish Spirits
Bearish Spirits's picture

YAWN.  Beige Book was predictably the same.  S&P +5 more, anyone?  Manufacturing is completely skewed due to C4C, so we need to see that shake out over the next few months.

How much longer can they keep using the word "stabilize" before people demand real improvement?

Wed, 09/09/2009 - 14:18 | 63825 Anonymous
Anonymous's picture

this is really sloppy work and wrong as hell. the wi was trading right around where the auction finished, not 3.35.

you think a 16bps tail would happen without anyone noticing? jesus. get a clue.

Wed, 09/09/2009 - 14:45 | 63868 I need more cowbell
I need more cowbell's picture

Yeah, you may want to do a retaction and a few mea culpas on this one.

Everyone makes mistakes, and when you do, fess up right quick. Y'all are being called out... 

Wed, 09/09/2009 - 15:52 | 64010 Howard_Beale
Howard_Beale's picture

Pretty scathing little ditty he wrote--but when you get the facts wrong and two hours later you still haven't fixed it, well, it doesn't look good for ZH.

Wed, 09/09/2009 - 14:29 | 63843 Miles Kendig
Miles Kendig's picture

Ben had better work the agency desk a little harder. Or, does he need a bit of the 3.85 +/- to juice up the next round of rinse & repeat?

Wed, 09/09/2009 - 15:04 | 63901 Anonymous
Anonymous's picture

The Across the Curve guy says there is a misinterpretation of these results.

Zero Hedge and the Ten Year Result

Wed, 09/09/2009 - 15:10 | 63931 Anonymous
Anonymous's picture


Zero Hedge and the Ten Year Result
September 9th, 2009 2:26 pm

The Zero Hedge blog consumes much time and effort on the topic of the Federal Reserve and monetization of the debt. I have involved myself in several high level fracases with the folks who run that blog.

I had promised myself that I would not be controversial again regarding that site and would accept some of the good stuff which they write and excuse the bad.

The blog’s coverage of the 10 year note auction is just egregiously incorrect and demonstrates the collective lack of knowledge of the various authors on the daily ebb and flow of the bond market. Here is a line from that blog’s story on the result of the 10 year auction.

“Yields 3.510% vs. Exp. 3.350%, 16 bps miss in final High vs. Exp.”

John Jansen writing again. The author noted that the 3.51 percent stop was 16 basis point higher than the 3.35 expected result. The story’s headline notes an expected stop of 3.35 percent. When I first read that headline I excused it as a simple transposition of 3.53 and 3.35.

I am a typographical disaster and hesitate to seriously criticize anyone for that error. However, when you refer above to the first line I cut and pasted here which states ” 16 basis point miss in final High vs Exp” you realize that this was not a typographical error and that it exposes the author’s ignorance and inexperience on the topic.

The author would have known before he/ she composed that line that the WI 10 year note has traded all day in the upper 3.40s and low 3.50s and had not traded in the 3.30s since Friday morning before the labor report.

That blog has made wild charges regarding the Federal Reserve System. I believe that the authors know very little about the Federal Reserve or the moment to moment iterations of the Treasury market.

If they did it would have been impossible to make such an outrageous conclusion about the auction.

One must logically conclude that when they make such a fundamental factual error as they did today that they should not be trusted when making grandiose charges about the conduct of monetary policy.

The comments of the bloggers at that site look and feel authoritative. They write well and and present themselves on a glossy site. The only problem is that in this instance they have demonstrated a fundamental lack of experience, expertise, and erudition on a topic in which they claim to possess all of those traits.

I am sorry to spend so much time on this but I think it is important to address the issue.

Wed, 09/09/2009 - 16:34 | 64072 CD
CD's picture

Yet another report on an analysis of a typo:


Isn't it reassuring, though, that this is the depth and the substance of the critique?

Wed, 09/09/2009 - 17:01 | 64102 deadhead
deadhead's picture

John....please ease up on the coffee and red bull.

It was a typo. An oversight. An error. A mistake. It was fixed.

You stated: "I believe that the authors know very little about the Federal Reserve...". With the volume of material about the Fed published by ZH since early this year, this statement says volumes about your emotionally charged state of mind versus your ability to analytically parse through Fed material posted on this site.

One has to wonder if you weren't looking for that "aha, they made a mistake" moment for reasons such as _________________________.

by the way, do you really think this site is "glossy"?


Wed, 09/09/2009 - 17:43 | 64169 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Yeah John, way to go! Ya did a great job ranting and squealing over a typo, and proving to everyone you sure know how to alienate ZH readers who would otherwise read your blog.

Nice work! What happens when he REALLY gets mad, does it involve typing in (CAPS!!)?

Passive-aggressive jealousy perhaps?



Ps- Um, my Brady Bunch filter is officially on. You gotta admit, I'm tame today by any standards.

Wed, 09/09/2009 - 18:04 | 64200 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Oh and congrats ZH, very pretty Alexa chart in comparison to acrossthecurve:

go compare the 2


Lets face it, this is the hot spot.

Wed, 09/09/2009 - 19:46 | 64335 DaddyWarbucks
DaddyWarbucks's picture

I'm glad that you're not missing the forest through the trees.

Wed, 09/09/2009 - 15:26 | 63968 Anonymous
Anonymous's picture

Very interesting that only a few commenters noticed the GLARING error in the headline information.

Everyone just takes it as gospel that there was a 16bps tail.

Shows the sophistication of the writers and readers of this blog.

No effing clue what's going on in the treasury market.

Wed, 09/09/2009 - 15:58 | 64017 Señor Tranche
Señor Tranche's picture

Usually very quick to make corrections.  I think TD deserves a pass on this one, and I'm sure the correction will be made. 

Wed, 09/09/2009 - 16:26 | 64056 Anonymous
Anonymous's picture

Note the transposition 35 53. Dyslexics--like me--are slow readers and writers. Give him a few more minutes.

Wed, 09/09/2009 - 16:07 | 64019 Jack
Jack's picture

It's called confirmation bias, and it's hard to avoid not getting complacent on.


As Tyler points out, RanSquawk had the original typo.


But they also wrote: Treasuries finished the session little changed, despite trading markedly lower after strength in stocks and looming supply put pressure on prices. The majority of the session saw T-notes trend lower, however stronger than expected demand for USD 20bln 10y note auction brought this trend to an end. As such, prices began to advance and quickly pared back most of the earlier losses. Finally, at the pit close T-notes finished down 2+ ticks at 116.300.

It's clear to me Tyler's post is a bad interpretation because of a piece of bad original data (a typo in the news feed), but it still should be corrected (edit: as it just was as I was typing this.  Thumbs up).

Wed, 09/09/2009 - 17:09 | 64121 cocoablini
cocoablini's picture

That Bid to Cover is pretty strong. Reasons to run to treasuries?

-Real rates will make this a sweetheart return as negative CPI keeps chugging away

-Banksters get free money to buy UST debt with a nice return(see real rates)

-FED forces banks to sequester cash from TARP back into FED and get interest + treasuries as collateral for the "cash."

-Banks are recapitalized every Treasury auction with TARP trade in. Cash to get clunkers...

-Banks are recapped with Agency Debt-to-UST bond conversions

-Banks can use low interest carry rates to buy Bonds as collateral to lend to retail suckers at high rates in the future

-Banks can use easy carrytrade and bond leverage to play craps at the tables. They are already broke. Who cares

-Buyers at auction dump on the market later in the week and the FED has to mop it up, quantitatively ease  via backdoor and voila, successful auction.

Wed, 09/09/2009 - 17:19 | 64136 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

I'm sure Dennis Kneale will make this relatively minor typo front page news and claim it "deliberate misinformation" by bloggers

Wed, 09/09/2009 - 18:04 | 64202 JohnKing
JohnKing's picture

but who will hear him?

Wed, 09/09/2009 - 18:05 | 64203 Anonymous
Anonymous's picture

The pattern is pretty clear and the critique is valid.

I'm still waiting for a correction about the ludicrous 4.6T credit derivatives position at the FED which TD, then Project Mayhem picked up on a few weeks back that generated so many heated comments. It doesn't exist and TD based the reporting on a report that clearly did not report what he was claiming.

TD doesn't retract when he's wrong. That's a big issue for a journalist and he does his fans a huge disservice by hoping no one will notice.

Wed, 09/09/2009 - 18:16 | 64229 Anonymous
Anonymous's picture

Despite RAN giving the wrong info anyone who is in the fixed income market would know that this did not tail 16bps by the bid to cover. I am sorry but I would have thought that a blog with such a following would not just post RAN as their only source. You have all of these bloomberg charts why not check out what is was on BB FYI, NEWS NOB on your terminal. BB had a full write up within 5 min.

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