$35 Billion 2 Year Auction Prices At 0.65%, As Foreigner Purchases Are At 2 Year Low

Today's $35 billion in 2 Year Notes came at a 0.65% high yield, slightly better to the When Issued, as the Primary Dealers continue to take down near two year high levels. And with PDs now turning and flipping to the Fed as soon as a day or two later, this is nothing more than the Fed basically buying up a major portion of the auction: in today's case it was 58.13%, higher than even last month's surging 57.58% which was the highest since August's 58.68%. Directs took down a now traditionally high 14.89% (and nobody still has any clue who the UK "fund" that has bought nearly $300 billion of USTs in the last year is), while indirects dropping to 26.97%, which was the worst Indirect take down since February 2009, with the exception of January when foreigners staged a year end wall off, buying only 26.97% of the auction. Otherwise, the Bid to Cover was 3.47, in line with recent auctions, and overall the auction had little impact on the broader curve. After all the Fed will never allow an auction to fail: not when it is taking down nearly 60% of each incremental gross issuance directly (and 100% indirectly).

Comments

[hedgeless_horseman]

...and Obama wants to invest in infrastructure.

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aqd1szFyNAec

I can't put my finger on the section of the U.S. Constitution where it says our Federal Government must act as an investor.  However, I do know that investing with borrowed money is called leveraged speculation, and is extremely risky.  With government employees making these investment decisions and managing the projects the risk can, unfortunately, only approach infinity.

[topcallingtroll]

What is scary is that some pension funds are doing.that right now.

[cowdiddly]

Its Article I sec. 8 That gives Congress and Congress only the power to spend the nations money. I am not aware of anyplace in the document that gives any branch of gov't the power to form a central bank. Many of our founding fathers warned against giving the government power to form a central bank. You can thank Alexander Hamilton for the original Fed and our latest incarnation after two failed attempts was created again in 1913 to stabilize the economy, but in reality to provide liquidity in the event of emergency ( i.e. wars or more to the truth bank runs). Ha, 10 recessions and 2 Depressions later.........The freaking government cant even run a post office or a retirement fund much less a central bank.

[CrashisOptimistic]

>>

After all the Fed will never allow an auction to fail: not when it is taking down nearly 60% of each incremental gross issuance directly (and 100% indirectly).

>>

Who is buying the other 40%?

[Commander Cody]

The Fed, via backing provided to offshore third parties.  It would not surprise me to learn that all US debt is currently being monetized (directly and indirectly).

[mark mchugh]

But, but China still loves US debt!  They love it so much they're pretending to be British now! (both Floyd Norris and Mish said so).

[Printfaster]

I don't understand why the treasury just does not print the money.  Instead of going to the investment banks for vig, the money goes directly to the banks and credit unions across the country.

These 2 years will get swallowed up in next month's POMO.

[drwells]

Because this gossamer-thin veneer lets the children running the world pretend that, somehow, we're not actually just monetizing our own debt?

[jtmo3]

I agree. Anyone who believes that there will ever be a failed auction as long as this fraud continues, is looney.

[topcallingtroll]

We need more growth more sooner. Even ook and mook knew that growth can hide and heal a lot of.sins. the collapse.scenario depends on no growth. I am.watching all my economic indicators including the waffle house chic's tips like a hawk. So far so good. We can correct into.growth with .positive trends.still intact. It would actually be a healthy development now.

[youngman]

At some point you would think the PD´s would want to wash their hands of this..even though they are making bank on it....its just very underhanded and hard on ones soul to be this crooked every week....but then again...money is king to some of these folk...even if they are stealing it from starving children....

[jtmo3]

Young...did you really just say that?

[frank]

The only foregin purchases were from an entitiy named "Helicopter Ben Mgmt., Offshore Fund LTD."

[topcallingtroll]

Wouldnt that be an amazing revelation if good evidence were found. I suspect the dollar would collapse immediately. Guys like ben are too cautious to.do that, but i would not put anything past.the maestro, mr gold is freedom...but go ahead and manage the.gold price....just dont.get caught.

[Tic tock]

You think Japan might at least have had the decency not to forget that its friend, the US, was holding a bond auction today...so fiscally fickle!