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5 Year Bond Prices At Record Bid To Cover As Indirect Demand Surges In Bond "Shorted" By Goldman Sachs

Tyler Durden's picture




 

Today's $35 billion 5 year bond auction was one of the strongest auctions completed in recent years, with a Bid To Cover of 3.20, the highest in the series, compared to 2.77 before and a 2.79 average in the last twelve auctions. This happened despite the yield dropping from 2.124% to 1.813%, the lowest since December 2010. Total competitive bids tendered surged from $97 billion to $112 billion, primarily due to Indirect bids rising from $18.6 billion to $24.4 billion, resulting in a drop in the hit rate from 74.9% to 67.5%. The Primary dealer hit rate also dropped from 25.7% to 20.7%. Indirect take down at 47.1% was the highest since September 2010. Completing the internals, was the -1.7 tail. As a reminder, on March 18 Goldman advised clients to short the 5 Year. That trade did not work out too well. As for the fact that this auction takes total Marketable Debt even further above the debt ceiling, that's irrelevant: the Treasury can just underfund retirement account holdings by another $35 billion.

 

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Wed, 05/25/2011 - 13:23 | 1309587 rubearish10
rubearish10's picture

Oh yeah, we must be "on the verge" of yet another market collapse!!! <sarcasm>

Wed, 05/25/2011 - 13:26 | 1309600 silberblick
silberblick's picture

Yes, and here is some more hilarity.

Click below to see a graphic illustration of bankster's dirty hierarchy of needs:

http://thesilvergoldhedge.blogspot.com/2011/05/banksters-dirty-hierarchy...

Wed, 05/25/2011 - 13:44 | 1309679 camaro68ss
camaro68ss's picture

this is turning out to be a par....ta

Wed, 05/25/2011 - 13:23 | 1309602 LRC Fan
LRC Fan's picture

Yep.  JAFA-Just another false alarm.  Nothing to see here, BTFD.  Count on the DXY being manipulated up to reel in new shorts and then hammered down to vaporize them all, one by one. 

Wed, 05/25/2011 - 13:33 | 1309628 knukles
knukles's picture

"on the verge"

(Snigger, snigger, giggle, chortle, snark, snark, snark)

Wed, 05/25/2011 - 13:56 | 1309706 baby_BLYTHE
baby_BLYTHE's picture

What's so funny? We are on the verge of an economic collapse, are we not?

Wed, 05/25/2011 - 14:49 | 1309791 slewie the pi-rat
slewie the pi-rat's picture

yes.  and no. 

pls see  v. 1st comment, above.

we have cash customers standing in line with the shills, in order to buy US goobermint iou's and get----1.8%/ year for 5 years. 

these folks have a shitload more green stamps than you or i. 

and, the dollar is strong.  strong!  people are hitting the risk on/risk off switch abt 3X/week, and the collapse is put off till everybody's favorite day:  tomorrow!  preppers are passe'.

we are all vergers now, b_blythe!

Wed, 05/25/2011 - 15:35 | 1310066 rubearish10
rubearish10's picture

Vergers say buy buy buy after the bond blast!!! Where's that "dog chasing tail" clip??

Wed, 05/25/2011 - 16:54 | 1310351 knukles
knukles's picture

No, we are not on the verge.  We are in decline as we speak.  It is not stable, it is not improving, it is getting worse by the day.  It is an economic condition that we are collectively experiencing in real time.  We have front row seats viewing the effective destruction of the modern economic miracle as we know it. 

It is not to be spoken of in the future tense, to be planned for.  Only those in a delusional state of mind, similar to the alcoholic/addict claiming that he can always stop tomorrow, are asking about what it will be like. 

Wake up.  It is not good and getting worse.  We have already lost a whole decade and naught is for the better.  Unless you're in the top 10% of income earners.

There is no "Mommy are we there yet?"
We've already arrived.
QED 

Wed, 05/25/2011 - 17:01 | 1310372 rubearish10
rubearish10's picture

Agreed and at the expense of these fake returns, it's better to be prepared for what's happening "right before your eyes".

Wed, 05/25/2011 - 14:28 | 1309805 Hard1
Hard1's picture

I guess your latest purchases of UST's must feel as great as when you bought that 99% financed  4th home in 2006 and were told that you were up 10% a few months later.

Wed, 05/25/2011 - 13:24 | 1309591 Dr. Engali
Dr. Engali's picture

Why the high bid to cover on the 5 year I wonder?

Wed, 05/25/2011 - 13:25 | 1309592 LawsofPhysics
LawsofPhysics's picture

Okay, who let those foreigners back in the building?  It looks like someone is predicting when those yields will go parabolic but will remain deliverable, until they aren't.

Wed, 05/25/2011 - 13:22 | 1309599 fuu
fuu's picture

"the Treasury can just underfund Treasurys by another $35 billion."

 

That just makes my head hurt.

Wed, 05/25/2011 - 13:27 | 1309605 Sophist Economicus
Sophist Economicus's picture

Bonds - Rally

Gold - Rally

Silver - Rally

Grains - Rally

Indexes, APPL, NFLX - Rally

NATGAS and OIL - Rally

What this means is...I dunno shit from shinola anymore EXCEPT short AIG!

 

Wed, 05/25/2011 - 13:33 | 1309639 the rookie cynic
the rookie cynic's picture

Liquidity crack-up boom?

Wed, 05/25/2011 - 13:24 | 1309606 Cash_is_Trash
Cash_is_Trash's picture

Sovereign debt bubble.

Wed, 05/25/2011 - 13:33 | 1309624 bogey4
bogey4's picture

Not exactly Bill Gross's shining moment.

Wed, 05/25/2011 - 13:36 | 1309645 knukles
knukles's picture

Unless he publicly recants, admits his mistakes, tells of the damage wrought upon his clients, cries upon the breasts of a botoxed saline silocon air head on CNBS, he will find a HIV positive Ghanaian male prostitute bedecked in a Saville Row butler's outfit hiding behind his terry cloth robe collection closet awaiting his DSK like veritable public humiliating perp walk demise.
Do Not Fuck From The Inside with the Powers That Be.

Wed, 05/25/2011 - 13:56 | 1309691 Boston
Boston's picture

Bill Gross: 0

Goldman: 0

J. Gundlach: 2

 

We have a winner!  

 

That said, I getting a little closer to the exit door.  Selling a lot of my 10-year T-notes and buying 5-year paper instead.  And moving up my entry points (to get stopped in) on shorting futures.

 

Wed, 05/25/2011 - 13:35 | 1309630 Highrev
Highrev's picture

"Shorted" By Goldman Sachs

ROFL

 

At least we know what not to do.

 

Wed, 05/25/2011 - 13:35 | 1309634 huggy_in_london
huggy_in_london's picture

its going to be like goldmans "we like commodities again" trade.  Take a look at the aud ... i'd be thinking twice about that trade....

Wed, 05/25/2011 - 13:35 | 1309635 max2205
max2205's picture

Steriod extend and pretend = underfund pensions like the Corp world does....oh shoot the Feds have to pick that up too. ah who gives a fuck

Wed, 05/25/2011 - 13:42 | 1309654 knukles
knukles's picture

Hey, Steve Liesman said today that everything was Hunkie-Dorie, it's all just a temporary lull.

Has anybody Rick Rolled Stevie Boy?
In 3---2---1....  

Wed, 05/25/2011 - 13:41 | 1309656 Dolemite
Dolemite's picture

Silver and oil and stocks (oh my)

http://deadcatbouncing.blogspot.com/

Wed, 05/25/2011 - 13:44 | 1309670 buzzsaw99
buzzsaw99's picture

Bond shortage bitchez.

Wed, 05/25/2011 - 13:56 | 1309718 Doyle Hargraves
Doyle Hargraves's picture

+1

Wed, 05/25/2011 - 13:42 | 1309673 RobotTrader
RobotTrader's picture

Proof that "Infinite Fiat" is truly infinite.

Bonds once again were "scarfed down" by hungry investors worldwide.

Amazing how people will absolutely lap up 1.75% 5-yr. bonds, but they will not touch MSFT which is trading at a 9x trailing PE and $6/share in cash and pays a 2.6% dividend.

Wed, 05/25/2011 - 13:48 | 1309690 SheepDog-One
SheepDog-One's picture

Heh, too bad about your MSFT in the widows and orphans fund.

Wed, 05/25/2011 - 13:58 | 1309686 Doyle Hargraves
Doyle Hargraves's picture

Obviously those smart f*cks love a negative return on their money...bonds for duh-masses!!!

 

http://www.youtube.com/watch?v=2sBmUszhP_Q

Wed, 05/25/2011 - 16:52 | 1310346 kito
kito's picture

we will be here 3 years for now talking about "being on the verge" of a financial collapse...face it, our treasuries are in demand and will continue to be in demand for a very long time. youre all dreaming if you think central banks are going to plunk down hundreds of billions of dollars elsewhere. no where else to go. period.

Wed, 05/25/2011 - 17:25 | 1310457 baby_BLYTHE
baby_BLYTHE's picture

willing to put money behind that bet? 

Wed, 05/25/2011 - 17:23 | 1310461 kito
kito's picture

absolutely! fiat i assume :)

Wed, 05/25/2011 - 19:00 | 1310770 JuicedGamma
JuicedGamma's picture

your fiat principle will be returned in 5 years, greatly devalued.  interest rates will no doubt be much, much higher.

Thu, 05/26/2011 - 01:02 | 1312036 ToNYC
ToNYC's picture

 

There will always demand from those insisting on some sense of security no matter the execution.

Thu, 05/26/2011 - 00:58 | 1312035 ToNYC
ToNYC's picture

 

My bank teller knows she'd be feeling better sporting a few 500 Euros  in her wallet.

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