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$36 Billion 5 Year Auction Prices At Lowest Yield Ever 1.374%, Indirects Take Over Half
The $36 billion 5 Year auction closed at a 1.374%, the lowest yield ever for this series. The Bid to Cover was 2.83, slightly lower than the previous 3.06 (which was a recent record), but still the second highest since 2008. Direct Bidders in this auction have declined to the lowest since January, at 8.7%, as the Indirect Bidders take down jumped to 50.8%: the first time foreign investors have been allotted more than half of the auction, again since January 2010. The obvious result is that unlike yesterday's 2 Year auction which saw Primary Dealers come to the rescue, as we have expected, foreigners continue to frontrun the Fed ever further to the right on the curve. It appears the sweet spot for foreign participation is in the 5-10 Year bound, as the Fed prepares to purchase ever more bonds of a matched duration.
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The Illinois teachers' pension fund will be happy to hear about this.
Oh, wait -- I mean the opposite of that.
Dear FED, In addition to scaring people into GOLD, Food inflation, commodities... you have scared off anybody from participating in these bond purchases. We know you took down 100% of the auction through your cronies. No one would buy at these levels.
Congrats, you've distorted the Bond market too... but with all of this the Dow is still at 10K.
Losers
They have scared the majority of people into "paper gold" which they will be happy to crash down on their "next to liquidate" list...
The FED is purpusfuly pushing people into long maturieties, to them it does not matter what they buy, it's all a dog and pony show for the common investor, they will lock every1 in 5 to 10 year bonds than they will cause 10%-20% inflation, DONT BUY IT
From Jim Cramer on Twitter:-
"I had fun being on with Andrea Mitchell with MSNBC as she has the best handle on what's happening in the economy of the mainstream press."
I had fun reading that comment!
She is the main sqeeze (when he is not patting himself on the back) of Easy Alan Greenspan right?
The charming couple were seen together at a Bilderberg meeting.
Andrea is soooo yesterday. And her main messenger boy, yesterday’s antihero Greenspan, is out of it, Andrea may be making lots of money but she’s not at the seat of power anymore.
It’s fitting that Cramer, who always seems to be out of the loop on what’s going to happen, thinks Andrea Mitchell, whose easy squeeze is out of the loop, has the best handle in the mainstream media on what’s happening in the economy. Sort of says it all.
It’s fitting also that Greenspan’s appearance on Time Magazine’s February 15, 1999 issue with Rubin and Summers as “The Committee to SAVE THE WORLD” is actually the brunt of The Onion’s Time Magazine spoof just coming out where the trio is dubbed as the “The Committee To Save The World That Actually Basically Destroyed It Utterly” … so powerful, I guess, that the original mag pix already has been pulled from HuffPo’s front page. (Note: The subhead on the original cover is: The inside story of how the Three Marketeers have prevented a global economic meltdown—so far (Rubin, Greenspan and Summers at the U.S. Treasury last Wednesday).
Here’s a small pix of the original with the Onion info of Greenspan’s last stand (a) and a big pix of the originial from the Time Archive (b):
http://tvbot.se/time-for-adults-the-onion-mercilessly-spoofs-time-magazine
http://www.time.com/time/covers/0,16641,19990215,00.html
P.S. More on this trio below: The Woman Greenspan, Rubin & Summers Silenced.
The Flim Flam Man must be rolling over in his grave.
To think that he missed by just a few decades the biggest baddest world government sponsored Ponzi scam of the millenium. With all the world the sucker, he must be positively sick to his now forever-resting-but-not-peaceful soul. We can only imagine the wallet pain he's experiencing right now.
Or should I say the wallet pain we shall soon be experiencing.
http://en.wikipedia.org/wiki/The_Flim-Flam_Man
http://www.imdb.com/title/tt0061678/
I wonder if the rothchilds are happy with the destruction ... Lol'
Nassim Taleb reiterated lately shorting bonds is a "no brainer". Well, that´s what he is shouting since February all around the world. Hey Nassim, how much $$$ did this "no brainer" cost you ?!!!!
In the long run it will cost him allot less then the people who are going long right now. If your not usuing leverage then its not big deal.
Gold stocks are goig ape shit.
'Gold stocks', wow I didnt know people could be so gulliable oh well they deserve what theyll get.
Well if you all are so misguided that you can't see US Treasuries are the best and only investment anyone should have, maybe you shouldn't be in control of your retirement account at all
http://www.eutimes.net/2010/08/us-said-preparing-new-laws-to-seize-americans-retirement-accounts/
Hey, they can't do this...! gulp.
Your avatar makes me dizzy. Like the concept though.
Why did the government rob the citizens of their retirement accounts?
Because that's where the money is.
Willy Sutton
In Soviet <strike>Russia</strike> America the FED frontruns You!
I don't care what regime you are living under, that is funny.
Huh, normally you would think these monstrously low yields would signal something is wrong. But CNBC says everything is fine!
Time to hit the BUY BUY BUY button! The C-man told me so
Avtually that's more a bright beam of light on Cramer's understanding of the big picture than on Greenspan's wife!
AGQ Silver 3x on fire! Bovina Sancta, Batman!
Can some one explain to me why even use GDP as an economic indicator? GDP only puts purchases an expenditures into perspective. It reminds me of a beer tab fundamentally.
Wouldn't a better economic indicator of our country's wealth be total assets - total liabilities?
And for economic health: (Exports - Imports) + (Total Revenues - Total Implicit debt - Total explicit debt) + (Investment + manufacturing output - services)?
I never understood why we use GDP it seems like a shoddy calculation.
But then we couldn't pad our economic performance figures with frivolous consumption financed with borrowed money. What fun would that be? Why you gotta hate?
GDP is used precisely because it is a shoddy calculation.
It's easy to manipulate. It misrepresents. That's why it is so useful.
For example, GDP increases every time you borrow, and every time the government deficit spends. That's good. We compute it by double-counting government employees (we add "dollars spent" on government programs, and then add again "employment" that includes government employees, so government personnel is "double-counted"). GDP doesn't consider unfunded liabilities. In fact, it doesn't consider *any* liabilities.
In fact, books could be written about the ways and manner in which GDP can be manipulated and made to misrepresent.
We love GDP. Say it with me. We LOVE GDP. </sarcasm>
Sorry but I'm still in love with GNP.
I'm old school. Get over it, that's just the way I roll. :>)
...and funny how M3 suddenly became an unimportant metric that they're not going to report on anymore.
Now you know why we went from GNP to GDP. It is way easier to pad numbers when you can count things made twice along with synthetic items like financial innovation.
"Assets" are a terrible measure of economic performance. In fact, they're arguably the worst possible one.
Simple reason: GDP measures what the market has already paid for stuff.
"Assets" are at best an educated guess at what the market may or may not pay for stuff.
1.374% yield is great, we should be thankful. In fact, we should pay THEM 1.374% just for the privilege of holding the bonds. Thank you Tiny Tim! God Bless Us, Every One!
Totally agree with you.
Interesting that the 5-year goes off at 1.374 while the 10-year is trading at about 2.44% Pretty steep curve, no?
Going green in less than 5 minutes! Wow what a farce of a market this is.
You can get a better return in a 3 month CD!
The Woman Greenspan, Rubin & Summers Silenced by Katrina vanden Heuvel | The Nation | October 10, 2008 CommonDreams.org
"Break the Glass" was the code-name high-level Treasury Department figures gave the $700 billion bailout; it was to be used only as a last- resort measure.
Now millions have been sprayed and damaged by broken glass.
But more than a decade ago, a woman you're likely never to have heard of, Brooksley Born, head of the Commodity Futures Trading Commission-- a federal agency that regulates options and futures trading--was the oracle whose warnings about the dangerous boom in derivatives trading just might have averted the calamitous bust now engulfing the US and global markets. Instead she was met with scorn, condescension and outright anger by former Federal Reserve Chair Alan Greenspan, former Treasury Secretary Robert Rubin and his deputy Lawrence Summers. In fact, Greenspan, the man some affectionately called "The Oracle," spent his political capital cheerleading these disastrous financial instruments.
On Thursday, the New York Times ran a masterful and revealing front page article exposing the culpability of Greenspan, Rubin and Summers for the era of dangerous turbulence we live in.
What these "three marketeers" --as they were called in a 1999 Time magazine cover story--were adept at was peddling the timebombs at the heart of this complex crisis: exotic and opaque financial instruments known as derivatives--contracts intended to hedge against risk and whose values are derived from underlying assets. To cut to the quick, Greenspan, Rubin and Summers opposed regulating them. "Proposals to bring even minimalist regulation were basically rebuffed by Greenspan and various people in the Treasury," recalls Alan Blinder, a former Federal Reserve board member and economist at Princeton University, in the Times article.
In 1997, Brooksley Born warned in congressional testimony that unregulated trading in derivatives could "threaten our regulated markets or, indeed, our economy without any federal agency knowing about it." Born called for greater transparency--disclosure of trades and reserves as a buffer against losses.
Instead of heeding this oracle's warnings, Greenspan, Rubin & Summers rushed to silence her. As the Times story reveals, Born's wise warnings "incited fierce opposition" from Greenspan and Rubin who "concluded that merely discussing new rules threatened the derivatives market." Greenspan deployed condescension and told Born she didn't know what she doing and she'd cause a financial crisis. (A senior Commission director who worked with Born suggests that Greenspan and the guys didn't like her independence. " Brooksley was this woman who was not playing tennis with these guys and not having lunch with these guys. There was a little bit of the feeling that this woman was not of Wall Street.")
In early 1998, according to the Times story, one of the guys, Larry Summers, called Born to "chastise her for taking steps he said would lead to a financial crisis. But Born kept at it, unwilling to let arrogant men undermine her good judgment. But it got tougher out there. In June 1998, Greenspan, Rubin and the then head of the SEC, Arthur Levitt, Jr., called on Congress "to prevent Ms. Born from acting until more senior regulators developed their own recommendations." (Levitt now says he regrets that decision.) Months later, the huge hedge fund Long Term Capital Management nearly collapsed--confirming some of Born's warnings. (Bets on derivatives were a key reason.)
"Despite that event," the Times reports, " Congress (apparently as a result of Greenspan & Summer's urging, influence-peddling and pressure) "froze" Born's Commissions' regulatory authority. The next year, Born left as head of the Commission.Born did not talk to the Times for their article.
What emerges is a story of reckless, willful and arrogant action and behaviour designed to undermine a wise woman's good judgment. The three marketeers' disdain for modest regulation of new and risky financial instruments reveals a faith-based fundamentalist approach to the management of markets and risk. If there is any accountability left in our system, Greenspan, Rubin and Summers should not be telling anyone how to run anything. Instead, Barack Obama might do well to bring back Brooksley Born and promote to his team economists who haven't contributed to the ugly mess we're in.
http://www.commondreams.org/view/2008/10/10-15
This rate manipulation is so immoral - good luck grandpa, you thought a cool milion was enough to provide a safe income in your golden years? SUCKER!!
Save for 40 years so that 1mill can earn you 125bps in a CD. $1042 a month gross is a great retirement!
The govt message is clear - please go die.
Notice to young Americans: If the rulers can extract the lifetime savings of senior citizens they can make slaves of the young just as fast. Do you think because you are young, you are a prized citizen of the cartel?
Extraction of sound money won't be enough to feed the monster; it will need the money from the young who are now working to satisfy its appetite.
Yet Again, Bond Vigilantes Nowhere To Be Found!
Folks, we have an example for this: JGBs. Liqiudity for JGBs has remained extremely strong, despite the fact that it is JGBs - not Treasuries - that J. Kyle "Keynesian Endpoint" Bass is targeting. Excellent demand for U.S. Treasuries can - and probably will - go on for a very long time.
Gold, Bonds, Stocks - it's all the same deal.
Rich people trying to preserve "wealth" (whatever that is) while the real economy of production and consumption goes begging.
Good luck with that.
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