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$35 Billion 5 Year Auction Prices At Fresh New Record Low Yield Of 1.26%, 2.96 Bid To Cover
The demand for Tim Geithner paper continues to be insatiable, as today's 5 Year auction prices at an all time low yield of 1.26%, a drop from the previous record of 1.374% from last month. The Bid To Cover continues to demonstrate just how schizophrenic the market has become, where all normal investors buy bonds to front run the Fed, while the Fed-PD complex itself is buying stocks. Make sense yet? Either way, at 2.96, the BTC was the second highest ever, only lower than July's 3.06. And, just like in the previous auction, the Indirects continue to creep ever to the right, taking down the majority of the auction, or 50.1%, leaving 8.7% to the Directs, and a healthy 41.2% to the Primary Dealers, which of course are merely warehousing the paper for a few weeks/months until they flip it back to the Fed for a tidy profit, and use the proceeds for some more 100 P/E stock purchases. Thank you POMO!
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The 10-year is sitting pretty at 2.45...wtf is going on here.
We are gearing up for a collapse. Beans bullets and band aides are your best investments. Now if I could only figure a way to hold them in my 401k.
i swear i have been saying i need to store/hoard l o t s of band aids. i use oh about 5 or 6 a day. J&J, bitches.
The saddest part of it all, it works,at least for stocks.
As a sarcastic chap named Durden often says, it works until it doesn't. This low volume is not unlike the tech bubble. Massive theoretical valuations were printed on the tape, as long as most of the shares were locked up with the original owners per IPO agreements. As soon as a few of those shares came to market..., well you know the rest.
They are looking for a greater fool, with deep pockets. As they say in the military, do NOT volunteer.
foreign buyers lost the first year's coupon already with today's USD plunge
who are these freaks?
Could this be partially be happening in anticipation of an equity market crash?
This gets interesting at about 7 minutes in.
http://www.youtube.com/watch?v=BoQ7LcYuwIg
Try a High Resolution view of the market...
China is devaluing the Yuan in stealth mode, they are dumping dollars but keeping the peg.
China is buying Euros to hurt german exports. China is buying Yens to hurt Japanise exports.
At the same time, Brazil who's biggest export market is China, is buying US Dollars to protect their exports.
At the same time, Japan who's biggest export market is China, is buying US Dollars to protect their exports.
At the same time, Korea is buying US Dollars to protect their exports.
The current currency wars have little to do with US economic conditions, it has everything to do with mercentilism.
+1
It *is* currency wars (like a circular firing squad), and it *is* mercantilism (support for large-cap in your host country, screw your electorate, screw all other private parties).
Looks like they use POMO proceeds to manip all markets. Most important LT bond yields--must stay below 3%. If it grows beyond that, they'll spook the stock market.
Objective : low 30 yr yields, high stock market to minimize nov election damage, and trash the dollar to get exports up. They'll try to throw a fright into the gold market on occasion, but i think they'll be happy with a steady ramp.
Just a tad, in the morning exchange treasuries for dollars, in the afternoon exchange dollars for treasuries.
What a joke.
So one of the questions for me is how involved the Fed and/or PD's are in purchasing stocks. Is the Fed buying them, are they backstopping the PD's, or are the PD's buying simply in the belief that QE.infinity will raise asset values?
The question's relevant to me, as I want to understand what if any money the PD's have at risk in the stock market. Because as the data rolls over, the retail investor gets out, eventually they'll have to save themselves as well.
I listened to the pit call of the flash crash last night, and read some of the comments from the ZH article on it. Perhaps it was engineered. Perhaps it really was a panic. But it sounded like a lot of the PD's were in there selling size in the pits (agency or prop?). Just musings...
Does this prove the existence of a great (infinite?) amount of suckers in the economy asking to be separated from their money? Or is just the result of some fixing behind the scenes?
The 1st Auction not closing at a record low will be the last successful auction
thanks for the article TD. how hard i try to understand this complex auction of bonds. i wanted to ask, if you buy a 10 year you have to hold that bond for 10 years and you make a yield every month? i don't think i have ever personally bought a bond. i don't understand them so why would i buy one. at my age i am suppose to have 60% in bonds. that seems almost like a crime to suggest us old people get a 1.6% yield. if i am interrupting this correctly. probably not. read between the lines, kath.
I would suggest ud rather be 60% in commodieties if you want to be able to buy a loath of bread when u retire from your savings
Hmmm, buy possibly defaulting debt that is based on a LIMITLESS FIAT currency at an all time low yield of 1.26% or buy part of the limited supply of physical gold with no counterparty risk ~10% / year. That is a tough one to decide (not).
Yeah, but what about 401k/pension plans. I bet not many of them have an option to buy PMs. If you had to choose between bloated stocks, bubblish bonds and currency which is being raped, what would you do?
Decisions decisions.... ;)
A deputy governor of the Bank of England would know the real rate of inflation, not the published rate, and how value is being stolen from savers to enrich and bail bankers and selected corporations. It’s impossible now to escape the truth. The strategy is intentional and criminal. The central banks have assumed control of the currencies, not to use central planning for broad economic benefit, but to deliberately transfer the wealth of nations to their own personal accounts. The arrogance of Mr. Bean shows how the ability to make this transfer stems from the power to control every economic and social function of a nation through its monetary system. It can never be said too often: deliberate, deliberate, deliberate!
Here’s the story from Telegraph.com.uk: where Mr Bean says low returns on savings are part of the Bank of England's strategy…
Savers Told to Stop Moaning and Start Spending:
Savers should stop complaining about poor returns and start spending to help the economy, a senior Bank of England official warned today.
(823 comments)
27 Sep 2010 -- Older households could afford to suffer because they had benefited from previous property price rises, Charles Bean, the deputy governor, suggested.
They should "not expect" to live off interest, he added, admitting that low returns were part of a strategy.
His remarks are likely to infuriate savers, who are among the biggest victims of the recession. About five million retired people are thought to rely on the interest earned by their nest-eggs. But almost all savings accounts now pay less than inflation.
The typical savings rate has fallen from more than 2.8 per cent before the financial crisis to 0.23 per cent last month.
Mr Bean said he "fully sympathised". But he continued: "Savers shouldn't necessarily expect to be able to live just off their income in times when interest rates are low. It may make sense for them to eat into their capital a bit."
He added: "Very often older households have actually benefited from the fact that they've seen capital gains on their houses." ...
Mr Bean said that encouraging Britons to spend was one reason why the Bank had cut interest rates. They have been held at 0.5 per cent for 18 months, hitting rates offered on savings accounts.
The strategy had led to Mervyn King, the governor, receiving many letters of complaint. ...
Had the Bank not acted, "unemployment would have been higher, wage growth would have been lower," Mr Bean added.
The comments angered groups representing the elderly and those putting money aside. The Daily Telegraph has campaigned for protection for savers…
Official figures show that savers have lost about £18 billion a year in interest as a result of the Bank's response to the worst recession in a generation. ...
http://www.telegraph.co.uk/finance/personalfinance/savings/8028884/Savers-told-to-stop-moaning-and-start-spending.html
Mr Bean is now the deputy governor of the Bank of England ?! :)))))))))
http://www.youtube.com/watch?v=X3VlSwUoIO0&feature=channel
Which is why the Fed couldn't give a rats ass about anything other than managing expectations with a cooperative shrink in housing (shelter) to "stabalize" the CPI prints so the program can continue. Once players move beyond thinking about a short term tactical buy bonds sell for QE x.x and expectations begin to hone in on the abject debasement implications game, set, match. Perhaps that is why the FX "war" comment is so striking via the FT. The obvious tactics of the Fed and its coalition of the willing have gone mainstream. Ergo, see HH comments on hyperinflation/politics.
As long as the interest rates continue to drop, courtesy of the Fed, bond speculators make risk free profits.
When it hits zero, its time to sell
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