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$32 Billion 3 Year Auctions Prices At 1.298%, Indirect Interest Picks Up Modestly

Tyler Durden's picture




 

Today's $32 billion 3 Year auction closed at a 1.298% high yield: a slight decline from last month's 1.349%, which coupled with the pick up in the Bid To Cover from 3.013 to 3.219, explains why the auction prices inside of the WI at around 1.305%. Overall, Primary Dealers and Directs once again were responsible for two thirds of the auction, with just 34.4% going to Indirects, which nonetheless was an improvement from February's 27.6% which was the lowest since 2006. It seems foreigners are willing to purchase a little more bonds than recently, although this was still well off the LTM average of 34.4%. Following in the model of last month's 7 Year auction, we expect Primary Dealers to flip at least 50% of today's take down within 3 weeks back to Fed, as the check kiting game continues with absolutely no supervision from the Fed (which explains the low hit rate of 22.9% for the PD bid).

 

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Tue, 03/08/2011 - 14:20 | 1030263 sabra1
sabra1's picture
http://www.marketwatch.com/sto...

SAN FRANCISCO (MarketWatch) -- Carl Icahn is returning all outside money from his $7 billion hedge fund firm Icahn Capital because the activist investor doesn't want to be responsible for losing other people's money if there's another financial crisis, according to a letter he sent to clients. "While we are not forecasting renewed market dislocation, this possibility cannot be dismissed," Icahn wrote in the letter, a copy of which was obtained by MarketWatch Tuesday. "Given the rapid market run-up over the past 2 years and our ongoing concerns about the economic outlook, and recent political tensions in the Middle East, I do not wish to be responsible to limited partners through another possible market crisis. After careful consideration of all relevant factors, we have determined to return all fee paying capital to investors."

Tue, 03/08/2011 - 14:24 | 1030275 Cognitive Dissonance
Cognitive Dissonance's picture

OK guys, the auction is over. You can let go of the market now and begin jacking the dollar again.

Nice work boys. Way to put your shoulder to the wheel. Beers all around, it's on Uncle Ben.

Tue, 03/08/2011 - 14:31 | 1030295 cnbcsucks
cnbcsucks's picture

Another insane ramp on virtually no volume.  NYSE volume is a lousy 282 million shares as of 1:31.  A true joke...

 

Tue, 03/08/2011 - 14:32 | 1030293 financeguru500
financeguru500's picture

This is embarrassingly ridiculous. How can the dollar maintain any sort of value when people flip the bonds back to the fed almost immediately.

I would compare this to a rigged poker game where other countries are invited.

At the table there are 5 people, 4 of them work for the casino and the 1 other person is tricked into thinking this is a fair poker game. At the end of the night, the 1 person who doesn't work for the casino loses his money and walks out feeling like he played a good fair game but didn't have the luck. Meanwhile the casino and the 4 other guys who played are laughing at the idiot who came to play.

Tue, 03/08/2011 - 15:05 | 1030430 Shameful
Shameful's picture

Because as you point out in the analogy the sucker doesn't know he's getting suckered. Talk to the man on the street and see how deep financial literacy is.

Tue, 03/08/2011 - 15:14 | 1030452 ghostfaceinvestah
ghostfaceinvestah's picture

I would be interested in buying USTs if I knew I could flip them to Benocide in two weeks for a guaranteed profit.

Tue, 03/08/2011 - 15:41 | 1030518 10kby2k
10kby2k's picture

Where do I apply to be a Fed insider? They must be hiring as part of their mandate of full employment.

Tue, 03/08/2011 - 15:39 | 1030506 OS2010
OS2010's picture

Thanks for the "check kiting" comment.  I was thinking exactly that phrase when reading this news earlier.  I guess this indicates the "b(ern)anking" farce is now complete.

Tue, 03/08/2011 - 15:56 | 1030568 NotApplicable
NotApplicable's picture

Or it will be once Tyler, et al., stop referring to these charades as auctions.

Now, while 'check kiting' is a fitting replacement, it too, is a historical relic with no basis in the modern world (since the float has been eliminated). So it won't work well as a way to get word out to the youth.

So... just what should this exercise previously known as a Treasury Auction be called?

Tue, 03/08/2011 - 16:02 | 1030581 cosmictrainwreck
cosmictrainwreck's picture

and TLT continues its march towards last April's low..... hmmm... wondering if they "do something" for long bond when it matches low? like what? "jack my rates down"? interesting.....

Tue, 03/08/2011 - 16:25 | 1030628 99er
Tue, 03/08/2011 - 16:36 | 1030667 The trend is yo...
The trend is your friend's picture

does anyone know what is causing this market rally?  oil is off slightly, the dollar is up an no real economic news......what gives 

Tue, 03/08/2011 - 17:42 | 1030893 John Law Lives
John Law Lives's picture

POMO?

 

Tue, 03/08/2011 - 17:43 | 1030892 John Law Lives
John Law Lives's picture

"Government payouts—including Social Security, Medicare and unemployment insurance—make up more than a third of total wages and salaries of the U.S. population..."

http://www.cnbc.com/id/41969508

Ponzi economy!

 

Tue, 03/08/2011 - 19:57 | 1031375 koot
koot's picture

People would be wise to not pay that much close attention to the bond market right now as it is a train wreck in slow motion.  Boring stuff really.  Listen and read Bill Fleckenstein for the ins and outs of what is happening.

More importantly, notice the inflation engine building steam across the economy.  People who think deflation rules are DEAD wrong.  Sure there is deflation but the numerator in the standard measure of inflation as Money supply times velocity is shrinking slower than the real GDP in the denominator.  Hence Inflation is outpacing deflation by leaps and bounds.  Notice if you to grocery shopping that frozen and canned foods lag way behind inflationary increases in fresh foods.  This is because the food going into the feeder end of the pipeline is rising fast while stuff coming out at the end of the pipe and in storage is based on old costs.  Cost push inflation is moving to a town near you and the only way to stop it would be for the US Federal government to default on it debt and allow the Fed to stop printing.  That is a real stretch going into an election year. 

Imagine and revolution in the US BEFORE the election.

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