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$78 Billion In Coupons On Deck
The US Treasury has announced the issuance of $78 billion in new coupons in the second week of May, of which $30.9 billion will go to paying down maturing notes, and $47.1 billion will be new cash. The issuance amount of the 3 and 10 Years are $2 and $1 billion less than recent February issuance. The Treasury has also announced "that other nominal coupon offerings may come down as well in coming month." With tax withholdings nowhere near to where they need to be, we are largely skeptical of this announcement, and we expect that Bills issuance will have to ramp up to provide the needed cash balance. Also notable is that the UST will commence to raise far more money in the TIPS market, as it hopes that investors will buy into the whole doctored CPI: Beginning in July, 10-year TIPS will move to an every other month cycle, with two new issues (in July and January) each to be reopened twice.
- $38 billion in 3 Year Notes May 11
- $24 billion in 10 Year Notes May 12
- $16 billion in 30 Year Notes May 13
And an as yet undetermined amount in 3 and 6 month bills, likely another $50 billion total.
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Wow. More bad news for gold. Talk about tightening. It's $3 billion less than the last toilet paper sale.
Obviously seeing a scramble for USD in the past 2 days. Gold has done OK... given what is going on. Am a little surprised its tracked EURUSD down as much as it has though.
I think a nice little bit of US short term issuance will remind a few people the state of the currency they have just shifted into, it could put a floor under gold for the short term.
Just go to Kitco and watch gold in all currencies.
So you get less FRNs for your krugerrand today but it held up pretty well against other paper.
Look at the yen pricing...sheesh. Also up smartly today against the Real and the Rubble
Selling bonds is THAT easy!
I wonder why Greece, Portuga, Italy, Spain and the UK have any problem with it...
Just say: BUY MY BONDS OR WE'LL NUKE YOUR ASS!
when you need to sell alot of your own debt, how timely for world focus to be elsewhere and for the rating agencies to knock down foreign markets. Just saying....
It's all well and good to point to others' insolvency when we are also insolvent but the reality is that we're trying to borrow money on a street full of insolvent borrowers. It's not as if ANYONE has any real money to lend us and certainly not at THIS burn rate.
Our headline deficit last year was what, $1.8T? Where in the HELL did that "real capital" come from? If we take a look at TreasuryDirect, we see higher numbers than headline, nevermind what the losses on the Fed's sheet are. In reality, it was more like $2.5T or so.
There is not $2.5T in free wealth surplus created sufficient to fund this at these rates. And that's just LAST year. Every year going forward. It stretches the limits of credulity for anyone to suggest that there is this much surplus money out there just WANTING to seek a home at almost 0% ROI.
Also, the TIPS auctions....lol. What's to stop the gov from just herding ppl into TIPS and then saying inflation is 0% when we see gasoline go up another buck?
So, what does the PPT do for an encore when the 5,7 and 10's are on auction? They are going to have to let the market tank to sell that trash. That means sub 10,000?
When you need to get the balloon over the mountain, sometimes you have to throw some ballast out of the basket. It's a bad time to be long gold and short treasuries.
I agree, but only as a trade. I'm still long gold and short treasuries on a 3 - 5 year timeline. This is just a buying opportunity for gold/shorting opportunity for treasuries.
They will have to crash the market every month, then every week, then every day. And inflate it back up on the same interval.
The amount of fiatscos sloshing back and forth will swamp the system.
I don't buy the theory that the PTB know what they are doing. I don't see persuasive evidence than a single mainstream economist understands the implication of energy inputs or the possibility of the real world not cooperating with their wishes.
I think what you might see is that the U.S. taking a liking to this twisted game of "Trash the Euro".
The resulting flight to quality should make the upcoming auctions go a little more smoothly. I am not surprised to see any of this. Quite frankly, Greece managed to hold on for a few months longer than I would have expected.
You gotta remember-- the rating agencies may well be suspiciously "timely" (CDS spreads say otherwise), but the rating agencies are late. Downgrades on Portugal and Spain should have happened several weeks ago.
The U.S. Govt would be wise to take advantage of the drop in long-term yields, and skew the upcoming auctions to the 10's and 30's. There's way too much roll risk right now.
The FED made a lot of money with currency swaps in 2008. Buying euros in a severe decline, and selling dollars high. If they have to do that again they are selling dollars at 83 and buying euros on the way down. Last DXY high was near 90 at the big bottom of March 2009.
Rinse and Repeat. Pickpocket and Profit
What's a few quadrillion among friends? On the other hand, if some poor soul owes a few grand on old student loans, he is pursued to the ends of the earth.
Why aren't the lapdogs, er, Washington press corp, asking how many billions of Obamabucks are being shipped over seas. Oh, I forgot. If the Fed does it, it's none of our damn business. Great country.
My special friend who is a billionaire has given me a hot tip. He says I should buy GMAC's 6.5% two-year bond and be haaappy!! I can trust Mr. Gross, can't I?
As Tyler pointed out yesterday, the Treasury/Fed have a bunch of paper to roll over this summer, not to mention all that new spending that needs to be funded. I expected the bull and bear will play footsie all summer as funding needs and political concerns dance about the floor.
Gold is holding extremely well. Silver and the PGMs not so much.
And how are they levitating GS? That stock is being gamed right now.
ATTN: Calpers and others
ALL ABOARD!
Bill Gross just nailed this one:
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2010/Lovin+Sp...
Someone should do a rewrite parody of Green Eggs and Ham. Greenbacks and Bonds, would you like them on a train? on a plane? or rained down from Ben's helicopter?
Would you like them on Bill Gross tips? on the market dips? or inflation TIPS?
GGreenbacks and Bonds are what's for breakfast, lunch, and dinner.
"Also notable is that the UST will commence to raise far more money in the TIPS market, as it hopes that investors will buy into the whole doctored CPI"
I believe that TIPS are the ultimate suckers bet right now. You are guaranteed to lose purchasing power because the CPI to which TIPS are tied consistently understates true inflation.
"US Treasury ... issuance of $78 billion ..."
Does that mean it's a slow week?
"$38 billion 3 year... $24 billion 10 year... $16 billion 30 year..."
What Happened to Timmay G's "Pay Day Loan Check into Cash"?
Can a brother get a 4 or lucky 13 week T-Bill over here?
Tyler: The CAPTCHA questions actually work now... Have you got Marla in the corner monitoring the CAPTCHA server coughing up phlegm balls?