The Primary Dealer Scramble To Dump Recent Issuance Continues
Today's POMO closed, with Frost Sack playing the F-E-D chime and not only buying up $8.412 billion in bonds, but paying Primary Dealers about $50 million in commissions. Not a bad deal for 45 minutes worth of work. We have already discussed that issue extensively and at this point it is up to Congress to deal with it. And while they are at it, perhaps they can also address the flipping churn of recent issuance that is just getting ridiculous. As the chart below shows, of the $8.4 billion in bonds, a whopping $3.8 billion was represented by just one issue: the 2.750s of 12/31/2017. This is the bond that was issued two short weeks ago, on December 29, 2010. Nobody even pretends not to be throwing the Treasury's feces right back at Ben Bernanke. And if the PDs can pocket billions in the process courtesy of a bunch of NYU students, and an "algorithm" running the whole process (in the absence of Bloombergs), so be it. It is not like anyone will ever make a fuss. After all the US is now just one Mutually Assured Destruction threat away from a complete and total dictatorship.
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