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$37 Billion 3 Year Auction Results
From TreasuryDirect:
- Yield 1.780% vs. Exp. 1.791%
- SOMA $5.7 billion
- Bid/Cover 2.89 vs. Avg. 2.7 (Prev. 2.62)
- Indirect bids 62.5% vs. Avg. 45.11% (Prev. 54.15%); Direct at 37.5%
- Alloted at high 13.08% (BBG)
No major reaction in prices:
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how much of that was the fed buying?
You have to wait a few days to find out how much the Fed buys back from primary dealers. The important thing is some CNBC talking heads are giving the auction an "A minus". Whatever the hell that may mean. Green shoot I guess.
SOMA = system open market account
that is the fed
today they monetized 5.7 billion of that 3 yr auction
tomorrow? maybe they'll buy the rest!
the fed is such a sick joke
You are watching masturbation in action!
Fun, no?
The Fed's name is Robert Paulson.
why is the TLT at the longer duration getting buying too. yes i imagine in
expectation on the longer duration auction coming down the pipe, but any
other reason anyone can think of? and keeping mortgage low does not count
as a reason.
Isn't it obvious? NONE!
Check back in a week and that answer may change due to 'regular open market operations'.
Ask some foreign CB's if they were given USD to buy, and the answer may change again.
Aren't petty semantics useful and the truth malleable?
remember this http://www.youtube.com/watch?v=n0NYBTkE1yQ
EDIT: oh, and this http://www.youtube.com/watch?v=cJqM2tFOxLQ&feature=channel
how did i know that was coming?
but the VERY first comment. Wow.
The theme of China showing up to 3-year and shorter maturity auctions is pretty clear, especially after the data showing that they shortened their average maturity to 3 years a few months ago.
Hey TD, just as a thought, you might want to compare the Fed ownership percentage to the Indirect Bidders instead... the reasoning for this is the currency effect might have justified the lower price on the part of the broker as well as the $625 Billion issued by the ECB several months ago right before the July auctions. Anyways, just a thought.... thanks for all the great work!
With the secrecy of the Fed's interventions as well as PD flipping based on Fed assured buybacks, the initial auction figures are almost rendered meaningless.
Because we don't know how to correctly interpret the data does not mean it's useless. And no, I don't mean that we're not capable, I mean that the real information is hidden.
Dont think China has a problem takin on some more 3year, bring on the 30s!
There's your other possibility. ANYONE looking to shorten their maturity. In this environment though even 3 years is a long time.
lol... Am I really the only person who believes the 5 & 7 year treasuries are the best asset you could be accumulating at the moment? Funny how so many people believe that we're in a deflationary environment and yet don't want the only security that provides protection :P
Why do you prefer the 5-7 year treasury ETF IEF to the shorter duration 1-3 year ETF SHY?
3 years gets you into your presidential puppet range. Though it's been generally disclosed that Obama has an 8 year shelf life.
Front part of the curve is just as volatile as the back part of the curve, the only difference is in price effect. Sticking to the 5-7 durations decreases overall volatility while providing some protection from a rise in rates (That's the front part) or a rise in inflation (back end risk). I like the 10, but there will obviously be a recovery by then, so I'll stave off that risk for the moment. Look back in history on rates, you'll see that the curve pivots on the 5 for the most part and they experience the least amount of reinvestment risk compared to alternate securities. Anyways, that's what I think... and what do I know? I'm just a trader like y'all.
You and me, buddy.
or being short equities ;)
the treasury rates are artificially low and there's obviously a bailout safety net under pretty much everything now. why not get a better rate with a low fee well diversified intermediate term corporate bond fund. get yourself a little bailout rebate.
if ben wants treasuries, i say let him have 'em.
indirect bidding will be questionable over time
strong buying by foreign investors!
Pravda says so!
PROTECT YOUR SELF FROM INFLATION:
http://etfdailynews.com/blog/?p=5357
well if inflation is an expectation then why is there buying of the longer duration?
why are 10 year bonds not getting dumped?
why is the fed's balance sheet so fortified to combat possible deflation?
Expectation and creation are sometimes things that are linked.
If you expect a team to go to the passing game, and switch to the "prevent defense", you frequently find the team making a nice comeback and you've prevented nothing. Sometimes playing too loose means you're not playing at all.
Deflation is the expectation. The way to "combat" it is to print money.
Printing money will fill the "hole" of deflation, but knowing when to stop is problematic. Things like this tend to get overdone.
Assuming (I know, I know, ASSUME), the "stimulus" kicks in at about the same time as the dead cat bounce is peaking, which is timed roughly in the same frame as the Fed's monetization plan, meeting up with reduced inventories and no factories in place to replenish and finding a devalued dollar with which to do the replenishment.......
You have an otherwise unusual set of circumstances that can create inflation.
The deflation will have to be left for later - but at that point, we'll probably have to issue new scrip.
agreed that inflation can and most likely is being manufactured using the least expensive means first.
as of now, it is the increase of domestic deflation and increase in global inflation that is the concern. the more the fed tries to fill the hole, the more it would tell me the problem has not been stopped. deflation is like pushing on a string.
i imagine the tape has priced in "the recession is over trade" and now corrects itself for the stance of Q3 earnings that will beat comps that are underwater.
perhaps some of this still needs to cook until the reality reveals itself.
china wants a stronger dollar with liquidity which makes an inverted curve
a win win. china gets its higher short rates and we get our lower long rates
to keep the mortgage rates low. which at this point not sure how
an unemployed consumer and risk tacked onto the cost of money will really
do anymore.
You mean how much of the indirects was the street who will quickly resale back to the Fed (before September) at a nice little assured profit.
"Indirect bidders, a class that includes foreign central banks, bought 62.5% of the sale. The closely watched group took 54% of the last sale in July after taking an average of 39.9% at the previous three auctions. The proportion of auctions of most maturities sold to indirect bidders jumped starting in June due to a change in the way bids were tabulated."
http://www.marketwatch.com/story/treasurys-up-before-first-auction-of-re...
No inflation unless you whipe out joe-sixpack´s debt,.that would hurt the Zombiebanks (GS won´t allow it)...or print the money and give directly to joe´s bank acount,..but that will piss off the Chineese,..hmmm..tough one for Obama.
What we will have is deflation along with dollar debasement,..that will leave foreign seats at the auctions empty,..(maybe they already are?)..unless there is double digit rates on the 10y,..all of which will feed the deflation spiral,..
Okey,.said my penny´s worth,..I´ll take my cyperspanking now!
good $.01
see my posts above on deflation
Hey TD, just as a thought, you might want to compare the Fed ownership percentage to the Indirect Bidders instead..We just can not compete with the vast amounts of money being used to "
good articles; good finance news & opinion articles ..http://www...
everyone be prepared to empty their bank accounts if Fed extends QE tomorrow. maybe the sheeple can stand up and create their own "liquidity event."
I only put money in the bank long enough to pay bills. If you take the blood out of the dragon he's less inclined to pump it through its evil little heart and hurt ya.
why would the fed extend QE tomorrow? if they are going to auction 10's and 30's, an extension would scare buyers of longer duration and only increase their cost of borrowing.
i would expect that they state a continuation of accomadation until economic policy and price stability is more stable. not sure they are ready to take the training wheels off this ride.
i am just an equity manager that read way too many fixed income books.
The UK surprised us with an extension to QE.
We might expect the same here, maybe another $300 billion through March, to support the med - long end.
All in the name of keeping rates low. The Fed can't afford to drop the ball now.
everyone be prepared to empty their bank accounts if Fed extends QE tomorrow. maybe the sheeple can stand up and create their own "liquidity event."
The real question is what happens to the front part of the curve if they do. That's what I'm waiting for at least... will the flight from short term move into equities causing a "melt up" or another way to think of it is "The dummys who were sitting there now pile in at the end of the move just to lose their cash after being so frugal for so long"
Alright already. Enough of the Magic shows and the re runs of " Masters of Disguise". Just print up the damm cash and give it to them. Simple, leaves no room for speculation.
"In Fiscal Year 2008 (FY08), the U. S. Government spent $412 Billion of your money on interest payments to the holders of the National Debt"
So 6 months of QE almost monetizes the interest payments. Tomorrow we'll see if they plan on continuing that. Either way it's a ponzi. The treasury will borrow to pay earlier borrower.
Man, I had 1.75 trillion, used circa 1.15 trillion buying garbage agency bonds, etc, Gee, I still have 600 billion left for easy money until December 2009.
I better inform BHO that if I am re-appointed, I will find another 1.75 trillion, no double that and make that 3.5 trillion, easy money for his pleasure.