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$24 Billion 91-Day Bills Auctioned Off At 0.041%; Window Dressing Theory Fail

Tyler Durden's picture




 

New year window dressing was responsible for the micro yields on bill auctions pre-New Year. Or so the theory went. So why did we just have another effectively zero bill auction? And no, the Lehman scramble for risk-free parallel is oh so very inappropriate here - after all funds have to window dress their Dec. 31 2010 results... Granted, a little early. So we ask, again, who is buying stocks when real money is willing to accept zero returns to park their cash in "risk-free" equivalents. Liberty 33 - once again, the podium is all yours.

 

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Mon, 01/11/2010 - 13:23 | 189987 Anonymous
Anonymous's picture

Don't squirrels and birds gather large amounts of food just before a big storm?

Mon, 01/11/2010 - 13:31 | 189994 Anonymous
Anonymous's picture

What was the bid to cover?

Mon, 01/11/2010 - 14:00 | 190040 SayTabserb
SayTabserb's picture

4, according to Denninger.

Tue, 01/12/2010 - 09:04 | 190915 Anonymous
Anonymous's picture

98 divided 24, retard. Read the table.

Mon, 01/11/2010 - 13:43 | 190009 Anonymous
Anonymous's picture

TD :

ahhh , you might want to point to 6mo TBills at .13% today ...... new alltime low . How in hell is buying TBills like crazy when the global recovery is widely acclaimed as 'FACT' .........??????

Mon, 01/11/2010 - 13:43 | 190010 Anonymous
Anonymous's picture

I have a question. If they recieved bids (tendered) of 96B at that rate, why didn't they accept all of them? Or would that have ruined the entire charade of there actually being a demand for T-bills? (Too much sold, too soon)

Mon, 01/11/2010 - 14:05 | 190048 SayTabserb
SayTabserb's picture

Good guess, IMO.  Or foreign buyers (China, Japan) rolling over longer term into short term, just to bide their time, keep the dollar in the viable range, and focus on non-US involved solutions.

Mon, 01/11/2010 - 18:48 | 190397 Ned Zeppelin
Ned Zeppelin's picture

They only  sell so much at a time. If you want to create the illusion of desirability for your product, you often resort to creating artificial shortages.  Leaving them gasping for more, so to speak.

Now, short duration debt is relatively good for the lender, not so much for the  borrower, who prefers longer term debt, to put off the day of reckoning for as llong as possible.  Alas, the long bond is not as popular as Ms. 91 Day. And that could get a lot worse.  

 

Mon, 01/11/2010 - 13:44 | 190012 john_connor
john_connor's picture

I've said it several times already, but it is time to sell all rips. 

Good luck to those holding long and doing anything other than scalping.

Mon, 01/11/2010 - 13:52 | 190024 SteveNYC
SteveNYC's picture

The Fed buys stock futures to keep the markets up, in a zombie market in which nobody participates anymore, keeps cost of equity down for corps that need to raise and simultaneously works on "confidence" of sheeple.

In the meantime, the smart money continues to buy short term T's at zero.

Shell game, just waiting for it to BUST.

Mon, 01/11/2010 - 13:59 | 190036 Anonymous
Anonymous's picture

Howabout a simple answer: the reason there is consistent Equity Futures buying is that money gradually comes out of 0% bills and short-end curve roll downs. Fear reached all-time peaks 1-yr ago... and risk appetite remains very depressed.

That said, confidence is at this point self-reinforcing. As another good Q gets posted by companies... prices will increase, late buyers will continue to trickle in slowly, and hiring and investment will start to slowly grow.

Time is on the side of recovery...

See you at SPX 1250 in a month or two. EPS will be $80+ for 2010 on SPX (15-20 multiple) and 2.5% div yield. Why cash?

Mon, 01/11/2010 - 14:10 | 190057 SayTabserb
SayTabserb's picture

Then why would another $25 billion go into 6 month Bills, as it did today? Why would this smart money miss the SPX rally happening in the next couple of months?

Mon, 01/11/2010 - 19:39 | 190472 Rainman
Rainman's picture

Hit the gas pedal. AA earnings take a dump. And yes, I junked the above from Lloyd .

Mon, 01/11/2010 - 14:07 | 190053 Species8472
Species8472's picture

All the Treasury Money Market folks need lots of this stuff.

 

Mon, 01/11/2010 - 14:14 | 190063 Anonymous
Anonymous's picture

position for both deflation and inflation.

inflation - precious metals, TIPS, commodities, laddered bonds short/intermediate, cases of whiskey.

deflation - cash/money funds/T-bills

45% each, with 10% trading account -that's what I've done.

if others are doing the same, and maturing fixed income is kept super short as cash equiv, that may explain part of the effective 0% T-bill.

eh?

Mon, 01/11/2010 - 14:18 | 190068 phaesed
phaesed's picture

Question is, who is accepting 0.04%?

Mon, 01/11/2010 - 14:50 | 190114 Anonymous
Anonymous's picture

I think uncertainty has kept a lot of people on the sidelines, or at least more so on the sidelines, with the strategy that when the "inevitable" correction occurs they will jump in when risk is lower. With that reasoning, accepting 0.04% momentarily seems like a smart move... as long as everything plays out perfectly according one's hopes.

Mon, 01/11/2010 - 14:19 | 190073 Anonymous
Anonymous's picture

<< How about a simple answer: the reason there is consistent Equity Futures buying is that money gradually comes out of 0% bills >>

what planet are you writing from today ? 6 month TBills trading at .12% right now ...... thats lowest yield in history of US Treasuries ...... wake up and go look at TBill yields ..... 30 day TBills at .01% right now !

Mon, 01/11/2010 - 14:21 | 190077 Anonymous
Anonymous's picture

If the FED accepted your crappy FNM bonds or CMO garbage at above market rates, then one would be quite willing to buy short term paper at zero to lock in those returns until long dated paper adjusts to the longer term inflation expectations in lieu of a multi trillion dollar auction which may not have been sufficiently subscribed at current market rates. We all know there is a buyer when risk/reward or price/value are in alignment. 2010 maybe "the year of reckoning". And I say it's about time. Move over, make room for the new money. This time I'll multiply my money on average four fold instead of 2 fold as I had done for the last bear market rally.

Mon, 01/11/2010 - 14:21 | 190078 Anonymous
Anonymous's picture

My hunch is the FED is buying most of the debt. QE is not going to stop or even slow down. FED buying everything is what's keeping things from collapsing.

Mon, 01/11/2010 - 14:51 | 190120 Seal
Seal's picture

I wonder if gold gapping up $20 Sunday at the Globex open is related to the Treasury bill purchases?

Mon, 01/11/2010 - 15:45 | 190191 GoldSilverDoc
GoldSilverDoc's picture

The FED is buying it.  I would put lots of (worthless, depreciating) currency down on that bet.  The question is, HOW are they buying it.  

 

Do they have any "off-balance-sheet investment vehicles"?   Hmmmm????  Count on it.

Mon, 01/11/2010 - 15:47 | 190197 GoldSilverDoc
GoldSilverDoc's picture

P.S. - for all you folks thinking "inflation or deflation" - don't fall into the trap of believing that asset price collapse = deflation.  It doesn't.  Not as long as the FED is in existence, and inflating (you can see the ACTUAL inflation in consumer goods with short time preference). 

Mon, 01/11/2010 - 15:54 | 190205 Anonymous
Anonymous's picture

Hey guys, I've been reading ZH for a long time and enjoy the posts and comments.

I'm not as adroit as many of you, but why would anyone park their precious dollars in US treasuries? We know that dollar devaluation is the name of the game, why not at least park it in oil or some other commodity as a better hedge?

I'm probably missing something here, but any advice or commentary would be greatly appreciated.

Thank you

Tue, 01/12/2010 - 02:21 | 190840 Irrational Exub...
Irrational Exuberance's picture

Anon…

 

I, like you, are somewhat of a novice, but have learned quite a bit on my trading adventure (and also coughed up plenty of tuition $$$ in the process).  I’ll pass on a few of my thoughts, most of which are echoed elsewhere here on ZH.

 

THIS IS A MANIPULATED MARKET.  I like to look at DIA, SPY, and QQQQ to gage ‘actual’ market participation, and not that by computers.  All 3 ETFs show very obvious declining volume with a slope of hope much greater than that of the 2003 recovery.  In 2003, volume was level, to slightly increasing.  In 2003, the indices touched the 50d EMA 5 times before a major correction/trend change.  This time, it has only been twice.  You won’t see this by looking at the indices themselves (here’s where I’m assuming the stuff like HFT, etc, is coming into play).

 

THE BIG/REAL MONEY MAY NOT ACTUALLY KNOW WHAT THE FUTURE HOLDS.  The big boys and girls have information we’ll never know.  ZH did a post on the big spread between the short term and long term Freddie Mac mtg rates.  Risk of default is perceived in the short term to be much much less than in the long term.   Thus the higher premium for longer term bonds.  If the economy was really in good shape, the spread between these two rates would not be at record levels.  This is saying there’s a ton of uncertainty out there.  Couple that with the numerous examples that ZH has provided of manipulation in the equity markets as well.  Let’s pretend you manage a billion dollars of other people’s money (chump change considering all the money that has been printed to cover losses, but a decent sum none the less).  Are you going to invest it in a market that is manipulated?  Especially this far into the market rise without any meaningful pull back?  Are you going to put it in a bank?  Do you really believe there is a solvent bank out there? 

 

Your comment: We know that dollar devaluation is the name of the game, why not at least park it in oil or some other commodity as a better hedge?  You need to keep in mind that the U.K, and Japan are printing faster than we are, and China pegs its currency to our dollar, so as our dollar devalues, theirs devalues even more to stay less valued than the dollar.  That is most of the world’s economy for you right there.  The E.U. will likely begin printing with massive defaults on the horizon.   Venezuela just cut the value of their currency in half.  Because of all of this…the dollar has actually been rising for the past couple of weeks, maybe as a neutralizing effect.

 

So to your question: why would anyone park their precious dollars in US treasuries? 

 

In principle I agree with you.  However, if you have to protect other people’s money, you don’t trust the markets or the banks, Uncle Sam is the only guarantee of re-payment.  Even if they have to print it up.   This is a huge statement not only about the stability of the markets, but the banks themselves.  In my humble opinion.

 

Keep this in mind as well.  The market does not follow logic.  With all of this going on, the market can, and probably will continue to rise.  How high?  I wish I knew. 

Mon, 01/11/2010 - 18:27 | 190376 johngaltfla
johngaltfla's picture

These yields have been this low for a sustained period of time now and we have not seen any appreciable move towards the historic norms. The sideline money is on the sidelines and as I've stated numerous times the window-dressing bullcrap is just that since the money started piling into the 1-3-6 bills in September of 09 in huge amounts. It looks to me like another financial storm, the back half of the Bear-Lehman-FNM-FRE-WaMu, etc. hurricane is about to come ashore.

And I think it is going to wipe the majority of the large regional banks off of the map.

Tue, 01/12/2010 - 11:44 | 191048 Anonymous
Anonymous's picture

What Would Cramer Do?

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