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$28 Billion 7 Year Auction Hail Mary From Indirects
Nothing like scaring the indirects shitless after their lack of interest in yesterday's 5 Year auction almost lead to a failure. The Fed's yo yo game with the capital markets continues.
Says:
- Yield 3.369% vs. Exp. 3.394%
- Bid/Cover 2.63 vs. Avg. 2.45 (Prev. 2.82)
- Indirect bids 62.5% vs. Avg. 44.39% (Prev. 67.03%)
- Alloted at high 91.73% (BBG)
The two year in the meantime is whistling all the way to the lack of the Chinese bank (or Timmy's back pocket).
So let's get this straight - the Treasury thinks we are so gullible to believe that "investors" are more interested in the long end of the curve now? Sigh.
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I'm willing to bet the majority of the indirects is nothing more than the street. Of course there is no way to tell until they start dumping them on the market.
actually, the way to tell this is by looking at the bank holdings of government debt. since we are almost exactly matching every past banking crisis, it would stand to reason that this continues. funding the public debt allows banks to continue to "de-risk" their balance sheets (risk = default), because they cant all shed assets at the same time with M.A.D.
guaranteed lending to the private sector continues to contract. which is also another way to indirectly tell who is buying this fecal matter up.
and if i see another CNBC headline trumpeting the drop in continuing claims as a positive - i may go postal. oh wait, i cant, the postal service is dead broke.
damn it.
very nicely said
Investors, no. Deflationists yes.
Indirects = currency swaps
Nothing like a little phony demand to calm everyone.
Yeah I'm sure that some of the half-trillion Big Ben swapped with foreign central banks is making it's way home. It's hidden monetization, plain and simple. There was a video posted a few days back here at ZH where Ben was asked what the swapped money was used for. After a small hesitation, he replied "I don't know", then he got laughed at.
Exactly, the Fed continues to monetize debt, only through sneakier channels as you pointed out with the currency swaps. Benflation is going to destroy our country.
Touchdown!!! We're saved! Re appoint whatsis name to the Alpha and Omega super duper secret society of the holy ordained Federal Reserve!!!!!!!!!!
It's all about deflation.
Then equities would not be going up, would they?
Give it three months, then shake the Magic 8-ball again.
Then equities would not be going up, would they?
My gut says the street picked up this issue, for to sell in the heat of the next equity panic, coming soon to a theatre near you.
Is it just me or have other folk noticed curve flattening of late? I mean, the steepener was the student body left trade of 1H09, so logic says that has to unwind at some point.
love the student body left comment. how do we score in 2H09?
Rosie coming up on Bloomie TV.
He is now a bull according to the anchor color...
I don't get Bloomie TV, so please let us know what he has to say.
The Fed fucked up and did not buy enough yesterday ahead of the auction (maturities don't matter in monetizing the debt, just so long as the bid is there).
Today, they bought enough. Buying Ts between 11AM and 1PM today (with leverage) was a lay up.
Operation Date: 07/29/2009 Operation Type: Outright Coupon Purchase Release Time: 10:15 AM Close Time: 11:00 AM Settlement Date: 07/30/2009 Maturity/Call Date Range: 02/15/2021 - 02/15/2026 Total Par Amt Accepted (mlns) : $2,999 Total Par Amt Submitted (mlns) : $11,707
Operation Date: 07/30/2009 Operation Type: Outright Coupon Purchase Release Time: 10:15 AM Close Time: 11:00 AM Settlement Date: 07/31/2009 Maturity/Call Date Range: 05/15/2012 - 11/15/2013 Total Par Amt Accepted (mlns) : $6,496 Total Par Amt Submitted (mlns) : $20,308Thanks GFI
Which LADIES do it for you?
LADIES OF BLOOMBERG?
http://www.gogomag.com/talkingheads/misc_bloomberg_f.php
LADIES OF CNBC?
http://www.gogomag.com/talkingheads/msnbc_cnbc_f.php
Does it matter ? They all look the same upside down.
Ben held his fire yesterday, anticipating more need for him to step in on the longer end?
I think he miscalculated yesterday, though a little nibble was enough to satisfy the bond market, and then nearly had a failed auction.
This morning he didn't make that mistake. A strong auction was guaranteed. I levered up on some TLT at 11, sold it at 1:30, nice easy pop. Not something I normally do, but shit, he bought $6.5B right before the auction?
http://www.gogomag.com/talkingheads/bios/females/Linzie_Janis.php
Her chest tells me lots about the current direction of the markets. So hot.
Oddly, I get more bullish when she's on TV. I suddenly want to take heedless risks, as if to impress... someone.
Think demand for treasuries is high now ... just wait until the shit hits the fan again. Mighty fine return on safe treasuries during debt deflation.
roflcopter incoming!
Fyi the indirects are the Federal Reserve in foreign bank drag. aka. The snake swallows its tail! "Press 1 for covert monetization." What do you think those currency swaps are for?
Hang on -- let me get back to the Antarctica National Bank trading desk -- I've got some 7 years to buy!! Oh God it burns!!! Acid to my poor balance sheets!
The Federal Reserve As An Engine of Deflation (sic!)
We know that this restructuring is occurring as the front end is choking on supply and hot money is flowing into stocks. Lack of demand and managers finally starting to consider risk is driving this move. It was only a matter of time.
It was very surprising how well this 7 yr went. It almost feels like someone may be trying to corner the 7 yr cash market. Many strange games have been played in this market over the past couple of months. For reasons I do not want to mention on a public blog, there is great opportunity for them to fuck around with the 7 yr cash. Most of which, are obvious. Either way, seems like someone is setting up to scalp some people.
Be warned.
Actually the spike in indirect bids was no spike in BIDS. It was a big spike in how much they were allocated. While the bid to cover ratio for primary dealers - who are obliged to bid - was nearly 4, the bid to cover for the indirect bids was 1,6. So the indirect portion was manipulated up by these bidders getting way higher allocations. Next time they may be even more careful when bidding (total indirect bids even this time was lower than the total offer).