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$31 Billion 7 Year Auction Closes At 3.141% High Yield, 46.79% Allotted At High
- Yields 3.141%% vs. Exp. 3.120%
- Bid-To-Cover 2.65 vs. Avg. 2.65 (Prev. 2.79)
- Indirects 59.3% vs. Avg. 57.17% (Prev. 61.72%)
- Indirect Bid-To-Cover 1.20
- Allotted high 46.79%
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Another seemingly strong auction. Still waiting for the ball to fall.
until interest rate swaps implode auctions
will continue as usual and generally strong...
not sure how long it will be before irs start
to fail....
I see the indirect has gone down for the 7yr but was up for the 13wk, 2yr and 5yr. Does this mean that they might not be showing up at the upcoming 10yr and 30yr auctions? The Fed has completed its Treasury buyback so who will convince the PD's to buy if they are going to have to hold them? A bond newbie trying to figure this out.
The FED is going to be buying anyway, directly or indirectly. It is just going to say it is not buying. Money is fungible, so suffice to say "You are to buy Treasuries and I am going to throw you money this other way, okidoki?"
I myself, as well as probably most ZH readers, have a hunch the the FED has built in some demand. But, the amounts involved in order to perpetuate buys to manipulate rates cannot remain undetected in the open market from primary dealers indefinitely. Having a POMO T buy program active gives you some options of how you juggle the balance sheet. When this "front" is removed, what then?
So I ask you, how will they hide these perpetual Billion dollar buys?
Thanks.
Mark Beck
pomo are only one tool which the fed uses to
manipulate rates as is fed funds discount rate...
its biggest sledge hammer is irs which are
exercised through its tbtf proxy banks such
as ms, gs, jpm et al....thus bond sales will
continue comfortably until irs fail....that is
the ball to watch....
as long as irs increase treasury sales will do
very well thank you....
At what point would the FED have to move the massive irs increases off balance sheet? or is your point that some specific irs types are already listed off balance sheet (specific derivate class)?
If the irs are on balance sheet, it would not be very hard to correlate irs increases to the T buy gaps. I would think that Ben would be asked directly about this "hidden" type of QE in the hearings. He is going to have a rough time as it is explaining the Maiden Lane slush fund.
When would you consider the irs fail? at what point, how long?
Thanks
it's not so much where is the visibility of irs
but the fact that they exist at all....
i have no idea when that market implodes....it
is several hundred trillion usd and will fail only
by a sudden credit event...it could be days or
it could be years....
see the rob kirby interview with jay taylor for
more details....it's posted on gata's site...
congress is so clueless it doesn't even know
what monetization is let alone hidden monetization
and interest rate control....
what does it mean Allotted high 46.79%?
Someone more knowledgeable at the FICC desk correct me if im wrong, but as far as i remember allotted at high is how much of the $31B was given at the high yield of 3.141%
They weren't too worried about the sevens, they had a few bps to spare there. The 10s and 30s will be strong. Bid to cover 9x, yield 3.4. [/kidding]
Mission accomplished! Now what?
That is the $64,000 question.
3.141 is pi to within 0.02%. Coincidence, or sine of the times?
Classic...gotto put this somehow on a t-shirt!
Will the 10 and 30 years Give us what we need?