$36 Billion 2 Year Auction Closes At Lowest Ever Yield Of 0.441%, Multi Year High Bid To Cover

Tyler Durden's picture

Today's 2 Year $36 billion bond auction closed as expected at a fresh all time low high yield of 0.441%, as everyone continues frontrunning the Fed and making a mockery of unsecured overnight market rates. Indicatively, the auction was trading at 0.446% WI, showing just how strong demand is for paper. Furthermore, at 3.78, the Bid To Cover came at 3.78, which is the highest since August of 2007. In terms of takedown, there is no surprise that Primary Dealers took down more than half, or 50.19% specifically, of the auction again: after all the Fed will promptly monetize this debt shortly via one of the tens of billions in POMOs coming down the road. Directs were responsible for 10.78% and indirects took the balance or 39.04%, higher than the recent average of 34.14%. Yet even with the collapse in the 2 Year yield today, the 2s10s is still plunging, and has now hit 208, an 8 bps drop on the day, as ever more investors are shifting their purchase ever more to the right in anticipation of QE2.

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TheMonetaryRed's picture

At the same time gold pushes against $1300. 


tahoebumsmith's picture

It's like watching an alcoholic in denial...just one more bottle and i'll sober up and get my life back together? 4678 bottles later, now just waiting for my new liver.

Cognitive Dissonance's picture

And what about the alcoholics family, friends, co-workers, boss, the doctor, the wife/husband? While we are certain to find plausible deniability enough for all those mentioned, at what point do we stop enabling the insanity? When do we step up and declare that while the alcoholic has the God given right to destroy him or herself, you ain't taking me down with you?

We have a big problem with the person yelling fire in a crowed theater, decalring that person as acting against the public good, thus his right to free speech isn't valid. Yet we all step back and let the alcoholic kill him/herself and destroy many people around him/her.

Isn't the same thing going down now in America specifically and the world in general? At what point do we say to the central banks and their enablers, meaning the political class, the financial elites, the corporations, you and me, "No more?"

Oh, I forgot, that's someone else's job, right?

GoatETF's picture


I'm up for an intervention with Benny and Timmy. Who should we bring in as the counselor? Carlin is dead so my list dried up.

zoomer's picture

I hope everyone saw this;

A central banker lets the cat out of the bag!


"They should "not expect" to live off interest, he added, admitting that low returns were part of a strategy."

"Mr Bean said that encouraging Britons to spend was one reason why the Bank had cut interest rates."

Cognitive Dissonance's picture

Not only does that dog hunt, but he rolls over and barks. Woof.

How many people can we crowd on one side of the trade before the boat capsizes? Ssh, the spirits are about to speak.

drbill's picture

Repeat after me. "There is no treasury bubble. There is no treasury bubble. There is no treasury bubble."

Part of me can't wait till it pops. The other part of me is scared to death of what will happen when it pops. Time to get my Tommy Gun ready.

zoomer's picture

I'm gonna get my Timmy Gun!

tunaman4u2's picture

So buy GOLD because hyperinflation is coming?

But no... bond yields are at record lows, the great depression is here!

PONZI Bitches! 

EscapeKey's picture

It's a great idea... until it isn't.

Pennies, meet steamroller.

plocequ1's picture

Auction complete. Banks get money to buy stocks. Markets go up. I set my watch to this shit. YAWN. 

EscapeKey's picture

No, the PDs buy treasuries with cash. They have to wait AT LEAST 0.001second, before they can repo them back to the Fed in exchange for cash. So, you see, we will have a 0.001sec dip in the markets, during which everyone (ie, the remaining HFT shops) buys in.

BUY THE DIPS, bitchez!

Miramanee's picture

It is quite hilarious actually. Obviously, the results of these fraudulent charades are anything but funny...oh well. The really funny part is how the common man continues to get utterly shafted and destroyed, and yet he is the man who believes everything he hears on the T.V. He is the man who has lost all ability to think independently, to discern truth from propaganda. And the rich man...well, he gets wealthier by the day, front-running the FED and placing "bets" in a rigged market. He is Biff Tannen at the racetrack, with the results a forgone conclusion. And still the common man, the one whose future continues to unravel, believes the advertisements on the T.V. By BP and....and all is well. All is well.

EscapeKey's picture

The tragic bit is that even intelligent friends of mine refuse to listen. They believe, because they can go down the bank and get a 5% 5-year fixed mortgage today, they can tomorrow, and hence no reason to panic. And that if base rates were to rise by 1% overnight, it would only translate into a 1% increase in 5-year fixed.

I really do start to believe that hyperinflation will happen overnight. We will wake up one morning, and half of out assets are gone.

Shameful's picture

What assets?  The more I think about it, Americans don't own anything.  Really on a average basis we are living paycheck to paycheck.  Most houses are underwater.  The average amount in 401k accounts is what a mighty 40k (for those that even have them).  Hell even real landowners are just renters, just try not paying property taxes. 

Our lifestyle is based entirely on this ponzi.  A big enough hiccup and it all falls away.  The American public will wake up with nothing and wonder how it happened.  This won't even be a wealth transfer per se, the wealth transfer has already happened just the public doesn't realize it yet.

Miramanee's picture

I must admit that I find the dissonance and denial difficult to bear. It all reminds me of the scene in The Podeidon Adventure, when survivors of the capsized ship blindly and without objection followed one of the ship's officers downhill (into the sinking part of the ship) and to their deaths. Interestingly, the USA is being victimized right now by our own propensity toward middle-of-the-road thinking. For decades, the American public have responded to political and economic and social injustices by either writing a few letters to their representatives or by ignoring the issues and heading to McDonalds for another cheeseburger. We could learn a thing or two from the citizens of European nations of South American nations, who are quick to act when they sense that they are getting hosed.

Shameful's picture

When are the foreign bondholders going to look around and ask "Who the hell is buying all this trash...I'm only in for "XXXX"?  I mean I understand the need for competitive currency debasement, but why not just print the currency and buy gold?  Will accomplish the goal of gut stabbing your currency and also give you an asset for the future.  After all they can at their leisure devalue vs gold.

Dr. Engali's picture

Why fight it? Just play along until it blows up.

RobotTrader's picture

Gold is dead today.

The rush for paper continues unabated.

curbyourrisk's picture

Actually they are just wiaiting for marching orders as to what to do next....

Bay of Pigs's picture

Yeah, sure it is, down a whopping $2-3 dollars. WTF?

curbyourrisk's picture




papaswamp's picture

Gold is insurance against FX and market manupulation...and presently it is paying quite well.

R.Temple Bligh's picture

Can someone tell me how Ben is doing it? He's got the best of both worlds...He has manufactured a thrist for US debt/bonds AND a stock market that keeps going up. These two things do not like to co-exist together. Either we get a bond sell off or stocks go down. I don't think bonds are selling off anytime soon.

earnyermoney's picture

Caught this at Jesse's blog: http://krugman.blogs.nytimes.com/2010/09/25/default-is-in-our-stars/?src...


Krugman hinted at U.S. default. Trial balloon by Obama.

fiftybagger's picture

Gold is a hedge against both inflation and deflation, which is really just another way of saying it is a hedge against dishonesty in financial markets.  Inflation is the dishonesty of debasing your currency, and deflation is the dishonesty of lying about your solvency and then defaulting.


This is why you buy gold, physical gold.  Why would you buy miners if you are hedging against dishonesty in the system?  If you buy mining shares you just have a piece of paper from a different liar than the first.

Grand Supercycle's picture

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