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The Art of Distraction
Was the Fed discount rate move an attempt to show discipline in the face of record supply coming to the market?
$26B 3 month bills
$28B 6 month bills
$44B 2 year notes
$42B 5 year notes
$32B 7 year notes
$8B 30 year TIPS
A $180B Fundraiser in one week (Feb 22nd-26th).
I am very suspicious of the 5-7 year auctions' performance.
Eventually the only thing left will be a silent vacuum after enough of the sucking sound this year.
Good luck.
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By the way, generally about 70-90 billion a week in bills are rolling off every week in this season, and on 2-15-10 we had around 55B of notes/bonds roll off as well.
So in actuality, this bond market is searching for a marginal 50B of cash (assuming most of what just matured will be searching for an equivalent home)...
You can access by maturity here...
http://www.treasurydirect.gov/RI/OFAuctions?form=phase1&typesec=notes&searchtype=maturity&x=12&y=12
The Chinese might be the large indirect bidder and could have started bidding that way to put pressure on the US to move towards balancing our books. Unfortunately, it looks like they have started to set off a chain reaction that could bring the whole thing down. Investors are now fleeing treasuries bc it appears that China is...
My picks for failed auction next week; the 5y gets the top spot, followed closely by the 2y and then the 7y. Three failed auctions next week? Why not.
The increase in the discount rate? who cares? not china. they have already left the party....and this is mainstream news! Buy silver, snitches!
Speaking of distractions, Tiger Woods Press Release....
"I am sorry, I married a beautiful woman who is a gold digging, fame chasing, narcissistic, inattentive, empty trophy. I am no superman and therefore could not resist the woman that threw themselves upon me. I was exhausted by my world travels, mentally taxing commercial appearances and constant glamorous lifestyle that resulted from my enormous fame and wealth. I promise to be good from here on out so that my sponsors will return. If they don't, I'll be writing a tell all book so that all men can live through my exploits vicariously and feel much more worthless about their slave existence. I have also become closer to God in this experience. Thank you. Please leave my family alone, unless of course it is a paid appearance or interview."
Priceless!!
Iz no big deal if you have no scruples or choice. Publicized rate is much less the under the counter rate. Payola of the extra interest will be paid with newly created digital currency that is hidden under the paperprestidigitizer rug. The thing will only blow up as the paper avalanche comes obvious. The amount of trust still shown in this ponzi is amazing.
The big Direct bidder will be one of the money center banks as usual.....prob GS when all roads lead to ROME......
my bet is for a big direct bidder on the 7 and 30y issues...
Good luck with the 5 and 7 year auctions.
is the fed a paper tiger?
It is a paper Pu**y we all want to get F**Ked by it!
"Was the Fed discount rate move an attempt to show discipline in the face of record supply coming to the market?"
Absolutely. The key to any successful confidence game (and that's all this is when it's boiled down to its base components) is the bright lights and the pretty girls. It's the build up, the set up, the setting up before hand of the dominoes, it's the show, the sizzle, not the steak.
The Fed was losing credibility. What did they gain from yesterday's "surprise" announcement? I would say that instantly the vast majority went from believing the Fed might have lost its Mojo to when will the mighty Fed drop the hammer.
We are so stupid, for the Fed has no power other than that which we give it.
The Games Bankers Play—to fool the sheeple while giving a nod and knowing wink to the boyz… From Fortune:
The Fed said late Thursday it is raising its discounting rate by a quarter percentage point, or 25 basis points, to 0.75%. The central bank said in a statement it made the move in response to improving financial market conditions.
The move is largely symbolic, because banks do little borrowing at the discount window.
The unanimous decision to boost the discount rate also has no effect on the more widely watched federal funds rate, which measures the rate banks charge each other for overnight loans. That rate is expected to remain between 0% and 0.25% for the foreseeable future, given the slack in the labor market and the still fragile state of the economy…
The last auction was a disaster.
In order to attract new money - The FED has to offer something. Higher Rate of return. Other wise, the FED has to purchase, its own bonds/securties.
As time goes on, the FED will have to offer increasing higher rates. That is the known. The unknown is the timing, amount, and velocity of the rate increases to attract sufficient buyers of US Debt.
Those who purchased bonds at lower rates, will be screwed.
The average American does not understand, they can lose money on bonds, unless they hold to maturity.
The debt bubble - It will not end pretty.
The debt bubble - Could go on for years ?