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$25 Billion 10 Year Auction Closes At 3.47% High Yield, 82.49% Allotted At High
- Yields 3.47% vs. Exp. 3.475%
- Bid-To-Cover 2.81 vs. Avg. 2.83 (Prev. 3.01)
- Indirects 47.3% vs. Avg 40.78% (Prev. 47.24%)
- Indirect Bid-To-Cover 1.51
- Alloted high 82.49%
- Directs at 4.5% of Total accepted
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Will someone please explain what all this shit means, or post a link to the tutorial?
Fucking thanks.
I am Chumbawamba.
I can tell you what this part means:
"Indirects 47.3% vs. Avg 40.78% (Prev. 47.24%)"
The Fed bought 47.3% of the toilet paper known as Treasuries.
Well, allegedly, "indirect" is supposed to refer to foreign buyers, but at this point someone has to be practically brain-dead to believe that the "foreigners" are buying this much trash from the US Govt.; plus the Fed can't really go on doing QE openly without the dollar imploding in short order, so that's how they try to hide their shenanigans.
Well I knew that part. Thanks all the same Gordon! Greed is good, baby!
I am Chumbawamba.
Shenanigans--stop already with the shenanigans. I must do an Irish shanty dance everytime I hear it. That's two more, and I'm fat, lazy, and clumsy.
From the Daily Pfenning a couple months back:
........ A long time reader sent me a note yesterday, and said, “Hey Chuck, did you see the story in The Wall Street Journal (WSJ) on Foreign Demand for Treasuries?” Well, I hadn’t and went immediately to the WSJ, and there it was… Tucked away in a corner so that no one would see it, if they weren’t looking for it… A story, by Min Zeng, titled, “Is Foreign Demand As Solid As It Looks?”
These are the things that really tick me off, folks, so stay with me on this… Basically, as we all know the U.S. Treasury Auctions have been getting “covered” easily recently, and foreign demand was listed as the reason… Which would have been the exact opposite of what I was saying about foreigners shying away from Treasuries.
Here’s the skinny… But I’ll let Min Zeng tell it, since he did the research and brought this to the public, even though it was tucked away so no one would notice!
“But in a little-noticed switch on June 1, the Treasury changed the way it accounts for indirect bids, putting more buyers under that umbrella and boosting the portion of recent Treasury sales that the market perceived were being bought by foreigners.
“The new definitions are deep in the arcane world of Treasury auctions. The change involves buyers who place orders through primary dealers. Those had been counted as direct buyers, but as of June 1 they were classified as indirect buyers, making that group larger than before. Because investors view that group as being dominated by foreign buyers, they assumed foreign demand was higher.”
Ahhh, so that’s what’s going on… The Treasury “moved the goal posts on us”… As Sylvester would say… That’s despicable! Why isn’t someone in Washington DC shouting from the rooftops about this? Oh, that’s right… They’re all in cahoots!
some pretty sloppy action post-auction looks like, 10s and 30 yields all heading north and curve steepening in general. without direct QE, what on earth keeps yields down? one answer is that agency QE will work, but then that cant be used to drive risk assets higher. the other, a direct transfer from risk to non-risk as the marginal risk-buyer gets tempted by each incremental bp increase in yield.
when rising interest rates force defaults, and eventual risk aversion sets in.
"without direct QE, what on earth keeps yields down"
Stealth Fed buying/"indirect" QE (pun intended)
ok - but how exactly does that work? If they are still buying treasuries, then it has to shop up on their balance sheet, which is being very closely monitored (as much as possible) by multiple sources, ZH included. If the amount of treasury continues to increase, then alarm bells will go off.
so, i guess Im confused about exactly what happens in this scenario.
Being a devil's advocate...
You are assuming that we are in a zero sum game, and the Fed isn't printing money specifically for the purpose of treasury price support.
They may say no QE, but it may be happening all the same, no?
Your position is equivalent to saying that they won't lie when they say no more QE.
i hear what you are saying, but the treasuries then have to appear somewhere, dont they?? unless you are telling me they are being held in an offshore account, which seems to be unprovable, i have assume they will show up on their balance sheet...
Fair enough. I can't and won't try to prove the existence of a phantom. but I don't think such a possibility is beyond the realm of possibility.
The Fed could set up a swap line or structure to finance bank purchases. It could be structured so that the Fed has an acronym on their balance sheet and two banks show the asset and liability. Or a tri-party structure.
I'm just saying that if the Fed wants to, they could do it. I don't see any liquidity drains anywhere, and repos ain't on the agenda. I expected more confirmation from the week's auctions.
Maybe the primary dealer prop desks are keeping it afloat with 'money' they get back from worthless mortgage paper? Duh
They moved the QE function from the FED to an offshore unmarked building in the Cayman Islands.Ben still running the operations, but now it is behind the scenes stealing...I mean dealings.
Dammit you just ate my comments.
Basically what is happenting is that this is a failed auction where the PDs have to pick up the auction at reserve price. Think of it as a failed IPO where the brokers have to eat the stock at the offer price for lack of buyers.
Looking out further I see China afraid of seeing a rapid decline of the dollar and ready to go all in (or all out that is) if the buck shows signs of jaundice. A rapid decline would get everyone rushing for the door and the fed could not stop an explosion in rates.
Of course it may time to explode rates because home selling is in a low season and business credit is in low demand. This is a real game of chicken.
What the heck, perhaps Obama can help when he goes over to China when he apologizes for his obsequeousness.
"apologizes for his obsequiousness..." Now, THAT is funny.
I think China has less reserves denominated in USD currently than they are letting on. I mean, no one has actually asked them, have they? And they may be reporting old numbers. Remember how their gold cache all of a sudden jumpy to 1000+ tonnes? Those Chinese are sneaky bastards. Don't hold it past them to have already spent their dollar reserves, which I think they did if you were following all the deals they were cutting all over the world since the beginning of the year (not to mention their stated goal of trading dollar assets for tangibles and mineral rights).
I am Chumbawamba.
In fact, I think the actual quote from the Chinese finance minister was...oh, yes, here it is: "Fuck your bitch-assed dollar, round-eye."
I am Chumbawamba.
The Fed holds them for them here...
http://federalreserve.gov/econresdata/releases/intlsumm/forassets2009103...
They would know.
I bet the 30 year is going to be a big disappointment.
do any other fervent readers of ZH ever suffer the same self-doubt that I have started to feel in myself?
And this self-doubt is the creeping feeling that.... I actually read ZH and follow the financial melt-up/death of middle class/rape of our country's future.... less because I'm an interested and concerned citizen (and investor) but more.... for entertainment?
Yes, exactly!
I have to admit, it is utterly fascinating. Like watching a slow motion car crash. I jump out of bed in the morning to check the price of gold, see if today is the beginning of the end. I doubt however, that much will change before the midterm elections, if TPTB can help it.
I agree - just like watching a car crash in slow motion. Only difference is that I know how a car works and how to operate one - here, I'm learning, learning, leaning, stunned that I have not understood the impacts, greatful that I am gaining awareness.
Yes - I have this morbid disapointment that the system has not come unglued by now. Am I sick or am I a realist in a fantasy world?
Yes, like me you are sick...sick of it all, and just want it to end already so we can start putting something better in its place.
I am Chumbawamba.
+1
I am still of the belief that China doesnt really care about their dollar holdings (in the grand scheme of things) because if they can tank us through a financial war and they lose a trillion dollars, it is cheaper than going to a real war....And they can build national pride...
Also, 1 Trillion dollars is too small a price to pay for building a mighty industrial powerhouse on the back of a industrially hollowed out USA.
The first number I look at in these auction results is Bid-to-Cover ratio. I thought it was the most meaningful....
If this is a 'failed auction,' but has a healthy B2C, then what other numbers should I be looking at instead?
Any help appreciated, thanks
Why can't all the demand be coming from banks that can borrow at 0.25% and make 3.47%? Sounds like a great investment to me.
ding ding ding ding we have a winner.
Do banks even have to "make" anything anymore? It's not like they have to do any real accounting, plus they are already allowed to create(or take from the Fed) as much "money" out of thin air as they want.
That is allowed every other full moon. Otherwise, it breaches the terms of the conspiracy.
I wouldn't mind a piece of that action myself.
If the TBTF banks are buying 10 yrs at 3.47% using funds borrowed at 0.25%, where does this show up on the Fed's Balance Sheet? Similarly, if they are buying equities in the stock market. This appears to be a totally risk-free gamble on the part of the TBTF, as if they lose the money, they can just take "forever" to pay it back at 0%. Presumably, it should show up somewhere. Does the the Fed's "borrowed funds" show a spike going through the roof?
Sure beats the hell out of loaning it to some poor small businesses!
I think the war on the dollar is much more occult than most realize. This is not a war on the George Washington by the communist chinese (yes they are still communist). This is a war on the American people by the new world order. General Ben and his sidekick "Wolfgang Geitner" plan to devalue the dollar to artificially inflate the real estate bubble so their comrades at JP Morgan and Goldman can make out on their bad derivatives bets and hopefully fend off the coming commercial real estate crisis. Then, like the EEU, the American socialists will usher in their own new currency, the Amero (google it, it is already being made by the US Mint). It is all a scheme to control the world via banksters and coinage. Of course, until there is a currency crisis, they cannot shove it down our throats as we say "ahhhh". Yes, the next crash will be a combination of asset deflation and currency deflation. A Keynesians worst nightmare! A short sellers dream!
Where is a link to a credible article that provides evidence the US Mint is already coining the Amero?
I am Chumbawamba.
I think the war on the dollar is much more occult than most realize. This is not a war on the George Washington by the communist chinese (yes they are still communist). This is a war on the American people by the new world order. General Ben and his sidekick "Wolfgang Geitner" plan to devalue the dollar to artificially inflate the real estate bubble so their comrades at JP Morgan and Goldman can make out on their bad derivatives bets and hopefully fend off the coming commercial real estate crisis. Then, like the EEU, the American socialists will usher in their own new currency, the Amero (google it, it is already being made by the US Mint). It is all a scheme to control the world via banksters and coinage. Of course, until there is a currency crisis, they cannot shove it down our throats as we say "ahhhh". Yes, the next crash will be a combination of asset deflation and currency deflation. A Keynesians worst nightmare! A short sellers dream!
That right Debt, the small business people like myself are getting poorer every minute.
has anyone noted the failure of Ambac?
All those munis are now downgraded a notch or 2.
Does anyone care out there?
I have a picture in my mind of the TBTF buying and selling stocks all day with each other and buying treasuries in daily recyling events.
Downgrades are good in bizarro world
Am I the only one that thinks it strange that 82.49% of the bids are alloted at the high yield? Is this all the PDs agreeing what they will pay?