POMO Over As Primary Dealers Dump Just Issued (December 28) 5 Year UST En Masse

While the slide in the ES following today's POMO is not to surprising (there are almost no economic data catalysts that can by fudged by either the BLS, Census Bureay or the Commerce Department today so POMO on meant buy, and POMO off means sell), is not surprising, what is shocking is the brazen arrogance of the Primary Dealers to flip what is pretty much an asston of the just issued 5 Year PM6 5 Year, which was auctioned off a week ago, and of which the primary dealers are flipping like deranged homeowners at the top of the housing bubble, without even a pretense of keeping the bond for at least a week or two! This is the purest definition of monetization: of today's $6.8 billion POMO, more than half, or $3.5 billion consisted merely of flipping precisely this CUSIP. Nobody, not even primary dealers, want to hold any recently issued government paper anymore. If even the PDs are expecting a total collapse in the Treasury market, does that means stock are a buy?

Comments

[system failure]

Screaming buy with conviction!!!

[Sophist Economicus]

A freaking Buy, buy, buy, buy, booooya buy....l

[ATG]

Sell

[asteroids]

The end will come when one of the PD's quietly takes a short position and dumps EVERYTHING! The first man out of the exit lives.

[Buck Johnson]

Didn't the US govt. make shorting an illegal act?  But your correct, that will happen and for them to be flipping these not even holding them for a week is telling.  It's telling us that they know this Treasury bubble and bond bubbles will implode and take alot of people and institutions with it.

[erik]

5 leading indicators to watch...

1.  crude oil

2.  copper

3.  retail

4.  10 year note

5.  USD

all of them are signaling a correction is imminent

[ATG]

Or even a top

[erik]

Maybe the first top in a sequence of double tops, like in 2007.  The ISM and ISM Services are just too strong to believe that this will be the top though.  However, there are a lot of potential issues that could blow up over the next 2-3 months so you can't discount an overall top completely simply because chaos can strike at any time.

Anyhow, if a top does materialize, those 5 indicators will tell us ahead of time.

[curbyourrisk]

Crude oil - Bubble

Copper - Bubble

Retail - Toil

10 year note - Trouble

USD........  Boom

[gwar5]

The Fed can buy directly from Treasury, no?

[system failure]

Gosh, if this leads to a flash crash, the exchanges can just call for a do over right? Just like all the other ones up to this point, that have born no cosequence to the ponzi being discovered. However, if this crashes the markets now, then its a definate do over with consequence.  

[drbill]

Housing, I mean stock prices, never go down.... until they do.

[Dixie Normous]

There are laws against churning.

[vote_libertaria...]

...and yet Treasuries get bid higher today???

[sabra1]

debt ceiling being raised will do wonders for treasuries!

[jus_lite_reading]

WOW. Just freakin' wow! MONETIZATION IN FULL FORCE! HOLY!

The FOUR HORSEMEN OF THE APOCALYPSE HAVE ARRIVED! SPIRAL OUT OF CONTROL!

[bob_dabolina]

Well isn't this just wonderful.

GM and C both green today.

[Cdad]

Good lord, this pisses me off!  Drag Ben Bernanke out of that office and fire his sorry ass.  Make detailed notes in the history books that he shall wear the crown of Banana Republic Disgrace in this country forever.  Toss out any DC politician  that stands in the way of this important SHIFT IN MONETARY POLICY!

And watch the EUR/USD cross for his next act of treachery because that bimbo is going down...and that 1.29 handle is sitting there all but beckoning for her to hack up that broken currency [which btw will put a rain cloud over L. Blankfein Wildest Dreams Park...which is to say the price of oil is about to burst, as well].

These ridiculous engineers.  Anyone have the real time spot price of UnicornDew this morning?

[SheepDog-One]

Rainbow dust is tradin higher this morning I hear!

[Cdad]

Of course....'cause I shorted Rainbow dust yesterday.  I can't get a break!

It's gonna be another martini lunch today, I suspect.

[Buttcathead]

why is the SnP down 3 whole points ???  I would think the rich folks would buy it up.  Prett bad when the rich folks wont even buy a few stawks.  wow

[flow5]

The important point is that the "free market" is able to "price" Treasury Debt.  Investors know, and the Treasury-FED also knows, what these debt obligations are currently worth to the PDs & their clients. If we were to believe the subterfuge from the "Modern Monetary Theory" adovcates, investors need only know what the FOMC's remuneration rate currently pays.  At that point Treasury debt monetization could truely be called "concealed greenbacking".

[Alex Kintner]

So how much did these 'PM6 5 Year' flippers make for their 1 week of sitting on a note? This is beginning to look suspiciously like looting of the taxpayers.

[Sig Sauer]

from what i can see they issued around 99-28.  market price during pomo window looks to have been 100-05 to 100-06.  so perhaps something like 10m in profit on the $3.5b sold to Sack.  unless i fat fingered my hp12c

[Alex Kintner]

So $10M to push the Buy/Sell button on a sure thing. Nice Racket if you can get in on it.

Thanks for doing the math. :-)

[plocequ1]

Thanks for posting the OTB chart. Is there something special about the  horse thats highlighted in yellow?

[Buttcathead]

OMG !!!  the SnP is down a whole five points !  Oh the Humanity !!!

[BennyBoy]

Fear not. All is well, loyal FED customers.

New POMO's start after Wednesday next week.

Now buy the fucking dip!

I have spoken.