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Indirect Bidders Bail From 3 And 6 Month Bills Even As Both Close At Record Bid-To-Cover
The just completed 3 Month Bill and 6 Month Bill auctions were interesting: the BTC on the 3 month came in at 4.69, a multi year high, and well above the 2010 average of 4.27%. Also the high rate has started leaking higher again, coming at 0.15%, compared to last week's 0.145%. Primary Dealers made sure there was no hiccup and they would be able to take down as much of the $24 billion auction as possible just so they can immediately turn around and repo the money, thus buying even more Whirlpool in large blocks, spooking the HFT algos in believing the stock is the next Google. After all - can't have a down Monday. It is verboten. Curiously the Direct take down surged to 19.2%, and almost surpassed the Indirect Take Down of 20.9%. The Direct (cough Bernanke cough) Bidders just refuse to go away. The 2009-2010 average on Directs is 7.81%, while that over the past 4 auctions is exactly double that 15.66%. Primary Dealers have taken down $51 billion of all 3 Month Bills so far in 2010.
Same story for 6 Month Bill: $25 billion closed at at 0.244%, also an upward inflection point. the Bid To Cover of 4.42 was also a record. At least there were no major shennanigans with the Direct Bid take down was 12.8% of the auction, compared to 29.5% for the Indirects. Incidentally this was almost a 2010 low, better than just the 29.1% in last week's auction.
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This can only mean that the average American is taking whatever money isn't being spent on iPads and Home Depot merchandise, and using it to buy up US debt. Very patriotic.
Yes. That is also my conclusion. I'm certain my neighbors are shifting all their disposable income to US Treasury Bonds. ;-))))
Wondering what Pimco is doing in their Total Return & Real Return funds. Even though BG has been talking down US bonds, I have noticed that both funds have been doing relatively well - suggesting that they are actually active buyers of USTs. Maybe somebody here has some insight.
I am one of the nitwits that keeps buying USTs but I am also buying lots of 2012 deep out of the money puts every time the market rallies.
QE by any other name still smells as sour. (Apologies to Shakespeare.)
This is not a Ponzi scheme. It is currency debasement. Much stiffer penalty under the law, or what used to be the law.
Nothing surprising here. The short end of the Greek curve is where the liquidity is (was) also - albeit at a much highre rate. If things were so great, these guys would come to market with a 10-year. Big deal. Wake me when something interesting happens.
When you say "immediately turn around and repo the money, thus buying even more Whirlpool in large blocks" what does that mean? Are you saying the federal reserve is entering into a repurchase agreement with the Primary Dealer where the PD buys the 3 month bill, and according to the repurchase agreement the fed has already agreed to immediately buy it from the PD at some profit that than is used by the PD to buy equities?
It gets funnier everyday! Geithner is a fucking joke!
The Treasury Is Taking Online Donations To Pay Down The Debt:http://www.businessinsider.com/holy-cow-the-treasury-is-taking-online-do...
If they actually get any takers, the sucker list would be worth its weight in gold (@1153). You could sell those people anything.
These auctions need to be a success. Now and forever, and in ever increasing amounts as rates move up. But the chrun on the short end is the most desirable for now.
The amount of debt needed to be sold will ratchet up week after week. It is just a matter of time before the liquidity slack is gone and the real non-performing market for sovereign debt, and long term debt of any kind in USD, is revealed. It is clear any financial strategy should exit before this happens.
Mark Beck
If this is such a "robust recovery" as the talking heads are babbling on and on and on about, then why is everyone diving for safety in 1-3-6 month Treasuries, gold and commodity currencies?
No need to answer. It's just my sarcastic question I would like to ask the Bubblevisionistas....
I believe we are supposed to auction about 130 billion in US treasuries this week, and not one failed auction (and Germany had a failed auction of it's Bund last week, GERMANY!!). What people should be asking and you won't get any of the MSM financial pundits of the US to say, is if the world is in such financial straights and countries are having a bad time with it. Why do these countries keep buying US debt by the billions and not use that money for their own debt/economic development? It would seem that we are sucking up all the disposable money into our debt markets, but that isn't the case. I think much of our debt is being monetized via the US treasury buying it's own debt via offshore vehicles and large bond companies (PIMCO to name one).
Just imagine every other week or week close to 100 billion dollars in debt is bought in the "open" market (that's just treasuries, I haven't even put in the state and local muni bonds) without fail. This game is going to end badly, real badly. All it takes is a black swan event (US states needing money and commercial real estate to name a few for the US and internationally the PIIGS and the UK going into default). If you don't think that is possible, remember the UK has a crap load of money invested not only in the PIIGS but also the eastern European countries (which are defaulting but not being reported). We are just one black swan event away from a domino effect of black swan events self perpetuating the implosion.
Just looked at PTTRX (Bill Gross fame) and they claim to be almost 45 % in cash. So BG is genuinely not participating in this orgy of treasury / bond purchases or am I missing something. Fund has still been doing alright lately - maybe he's got some twisted derivatives in there that help his case for now.
Care to wager that "cash" he reports is actually in 4 week notes?