$32 Billion 3 Year Bond Prices At 1.000%, Indirects Decline For Third Month In A Row

Tyler Durden's picture

Today's $32 billion bond priced at the memorable 1.000%, with auction strength confirmed by no surprises to the WI, and also the highest Bid To Cover since August, and the third highest ever. Naturally, none of this due to actual demand, but merely due to Primary Dealer expectations of a prompt and profitable flip back to Brian Sack: PDs accounted for 51.9%, with Directs taking down a notable 15.3%, leaving Indirects with the lowest allocation of the three past auctions or 32.7%, the the third lowest since January 2009. But nobody cares about the declining foreign interest: after all the ponzi game is all internal. And since this auction is potentially debt limit busting (as it is more than the total capacity under the debt ceiling), we can't wait to see what machinations Tim Geithner's henchmen will concoct to prevent an unconstitutional breach of what is now known as the "debt target." Look for Cusip QM5 to be briskly monetized as soon as the next 3 Year POMO is announced, when the next POMO schedule is revealed tomorrow at 2 pm.

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FOC 1183's picture

crowding out in its purest form

Highrev's picture

Has the Fed become the Largest Hedge Fund in the World?

And will it also become the ultimate Blow-up? (If so, forget about collecting on those PUTs.)

We first saw it here on ZH. http://www.zerohedge.com/article/did-fed-its-stealthy-synthetic-bet-keep-yields-low-become-next-aig

I just came across this great How to Blow-up a Central Bank and Ruin the Entire Country for Dummies video (with footnotes!)

Check it out. http://www.marketskeptics.com/2011/04/federal-reserve-is-selling-default-insurance-put-options-on-treasury-bonds-to-drive-down-yields.html

Thanks to Fibs and Waves for bringing this to my attention (dated May 3 I know - I've also got a real job and sometimes it takes me a while to make the rounds).  http://blankfiendsew.blogspot.com/2011/05/interest-rates.html



I just noticed that Tyler had this linked in his original post (a link that I obviously didn't click at the time). You can junk me if you like, or you can enjoy it again. Call it a one month review. ;-)


carbonmutant's picture

" Alternatively, we could sell put options on
longer-term Treasury securities at strike prices associated with desired longer-term yields. " - Greenspan FOMC Meeting Transcript

magpie's picture

Yes, the Treasury could just sell CDS on itself.

rokakoma's picture

I'm curious about next week's notes auctions announcement. Will they cancel them?

Usually it was about $99B + $10-15B TIPS. Now? I guess it will be around zero.

Or more likely around $50B which is the maturing amount, resulting zero additional cash. (And a net $60B lower cash balance where it was normally.)

magpie's picture

Weren't asset sales also an option ?

Sudden Debt's picture

At least THE banks still make money....
À honest days work for 100,000,000 dollars!

hugovanderbubble's picture

After all the ponzi game is all internal

-excellent exposure of the biggest fraud ever done in financial markets.

hedgeless_horseman's picture

Since the investors are aware of the ponzi, the US Treasury market is, technically speaking, more of a protection racket

A.W.E.S.O.M.-O 4000's picture

Doesn't the first person to bail out of a Ponzi scheme usually make money?

Note to self's picture

No sweat on the debt ceiling - will get raised.  Negotiating parties are ony $2T apart.

firefighter302's picture

Boehner has already conceded.



Boilermaker's picture

LMFAO...look at the IYR today.  You can't be f'ing serious.

Vincent Vega's picture

Word around the campfire is that The Bernank, taking his cue from Citigroup, will simply reverse split US debt 1 for 10 and forward slpit US$ 20 for 1. Problems solved!

lizzy36's picture

Liability Mangement Exercise......US style.

I did it by Occident's picture

Funny how words are used as propaganda newspeak.  Like how "police actions" are used to describle what could be a war for all intents and purposes.   

A.W.E.S.O.M.-O 4000's picture

"Police Action?" Get with the times son. It's called "Kinetic Action" now. Make a note of it.

Jim in MN's picture

Careful the conglomerate/governmental spooks don't shut you down for dangerous frivolity (this ISP gave no notice before shutting down a subscriber's site and delivering personal, identifying information to Koch Industries spooks):

Bloomberg Business Week


Judge rules against Koch Industries in media hoax

A federal judge on Monday sided with environmental pranksters behind a media hoax targeting Koch Industries Inc., upholding First Amendment protections for anonymous political speech on the Internet.

U.S. District Judge Dale Kimball in Utah tossed out a lawsuit filed by Koch Industries stemming from a bogus website and fake news release issued in December that falsely announced that the Wichita-based company was changing its financial commitments on climate change to fund more environmentally friendly groups. Koch's lawsuit had sought monetary damages as well as the identities of the pranksters.

Kimball also issued an order prohibiting Koch -- one of the nation's largest privately held companies -- from using any identifying information it may have already obtained from an earlier subpoena on the company that had unwittingly hosted the fake website for a few hours before it was taken down.

RobotTrader's picture

Chinese are selling gold on this little pop and piling back into Treasuries.

They sure don't want to take any chances of having to suffer through another meltdown in the CRB index.

lizzy36's picture

No way is China selling their gold.

They are busy buying what is on sale in Euroland. Definately not what is premium priced in US land.

tmosley's picture

Do you just grab random words and fling them together, or are you really this stupid?

Your posts read like Mad Libs.

Boxed Merlot's picture

can't wait to see what machinations Tim Geithner's henchmen will concoct to prevent an unconstitutional breach of what is now known as the "debt target."...


How about printing tribute paying (in benny bux of course) paper all the way to the ceiling, then switching over and printing United States Notes to serve as ferrel reserve replacements?  The transfusion should be able to flush all ben's junk from the system in a just matter of time. 


Oh wouldn't it be loverly?

carbonmutant's picture

Debt ceilings are for the "little people"

magpie's picture

Debt target lol

"I do solemnly swear to max out my credit card to the limit, so help me Chairsatan"

RobotTrader's picture

Geithner's forehead probably has over 1000 holes in it from all the Botox injections.

I doubt he is really paying attention to the blowhard congressmen cackling about the debt ceiling.

He'll just print more electronic digits and hide the proceeds offshore in the Caymans.

Beside's, Uncle Gorilla's offshore debts probably exceed the "official" numbers anyway...


ebworthen's picture


If it was Timmy's future he was juggling gangrene covered knives with instead of my kid's I could laugh.


newworldorder's picture

We here at ZH are bothered by all these machinations, but have you noticed what is going on in a lot of other sites? NO ANGST about the FED, the treasury, debt ceiling, etc. Its all good. Nothing to see here.

My point is, that while we are right to be concerned, the majority of the public are focused on other things wanting and expecting their government to fix things. They enjoy the sunshine while we get wet from pi**ing in the wind.

ebworthen's picture

True, but just wait until they realize what the soylent green they are enjoying is made from and sun = cancer.

tahoebumsmith's picture

"debt target"??...just keep changing the Constitution as you go and hope nobody calls you on it. Just like entering into a war without a vote from Congress or passing a Trillion Dollar healthcare bill without the Senate. America was built on the Constitution, just more proof that America no longer exists.

firefighter302's picture

It still exists..  within us.

When Cornwallis was defeated by Washington at Yorktown, the British band played, "The world turned upside down."

In a perverted way, America has turned upside down, again. 

Constitution and personal liberties be damned. Taxation chocking the populus and a debt and currancy excellerating in the wrong direction.

We need real leaders of change. (Change back to "Originalist principals" and Hayak's economic model.)



I did it by Occident's picture

"unconstitutional breach"

as if that stops TPTB.  Half of everything they do is unconstitutional.

Crack-up Boom's picture

If I squint, I can see Bernankenstein's face in that chart. 

Pete15's picture

Hold on Direct bidders purchased 15% from their usual 11% WE ARE SAVED haha but seriously tho could anyone explain why direct bidders purchased a little more this time??

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