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Putting Today's Record 30 Year Direct Take Down In Perspective
The chart below demonstrates how something is very busted when it comes to bond auctions recently. We have previously discussed the ever increasing proportion of Direct take downs in the short-end. Today, we saw a record explosion in the Direct take down for the longest bond purchasable. Just who are the Direct bidders? Whose orders are they executing? Are these merely a proxy for China or the Fed? What happens when that "mysterious" demand disappears? Nobody knows. Which is why Rick Santelli called this a failed auction.
All this is accompanied by a collapse in the Indirect bid (think foreign buyers) to the lowest levels since November of 2008. China is finally coming through on its Bond boycott promises.
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The Chinese smoke you smell may well be a fire.
Higher Interest rates would be my guess. Or a forced market correction to help build demand.
Chinese smoke!!
It's probably fake smoke!
A war with Iran might come in handy.
This is amazing. It is finally happening....
Good for hundo on dow
What does all this mean..? I don't understand bonds..
a rep from JPMorgan will be calling you soon
BWAHAHAHAHAHA!
solid.
+1
It means S&P will jump 20 points.
Ahh Ok thanks Leo!
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Whoops, who screwed up and forgot to bid this time. God Damn it flunkies, put down those bonus checks and Ferrari brochures and pay attention to your terminals.
God, you just can buy good crooks these days, even with million dollar kickbacks.
If the PDs were angry at a 17% Direct takedown of 10s, they must be pissing blood this afternoon.
Shouldn't the legend for the black line on the 2nd chart be "in-direct bids"?
That was my thought.
That was my thought.
Good Articles: http://www.iamned.com
We think we can just print our way out of this mess
The direct bidder has to be a the Fed or a proxy working under a guarantee. I used to think it was the Chinese but after that stunt we pulled with the Dali Lama and Taiwan there is no way they increased participation on the long bond, ergo, it has to be the Fed or a proxy. IMHO
Mr. Lama visits the White House next week.
Chinese get funny about humiliation....real or perceived.
I have this weird feeling that Hillary's fingerprints are all over this... esp. since she's in charge of this relationship.
well don't worry our beloved government has a back up plan for our debt. http://www.youtube.com/watch?v=TRgRz3nSG7o
Well, we know it aint PIMCO's Bill Gross, maybe its Lord Abbott? LOL No one in US wants these crappy yields anymore, that is plainly visible.
Remember the good 'ol days when we worried about balance of trade deficits? This was years ago when we actually produced something and exported, (before out sourcing.) Now we just worry about who is and isn't acquiring worthless paper, and how.
I don't know much about the fixed income markets but....lots of news about the Chinese dumping any US bonds without explicit US Government guarantees. So, wouldn't that lead them into the Treasury market while they were exiting the Muni and Corporate markets?
There are other assets they could be moving into. That and remember would you announce your exact action before you made a major trade on it? I'm not saying the Chinese aren't reducing their expose on US debt (I really don't know, I don't have an inside track) I'm just saying there might be some bluff and lies involved.
They could have went into PM
Au up $22 today to 1092.
Ag up $.45 to $15.61
Dollar up at the same time...
They also could have gone...
Don't worry. The delinquent Fannie and Freddie notes being monetized will provide adequate long liquidity over the next few months.
Yep, probably close to $200b of liquidity. Interesting that this will be done by the 1st week of March. Just in time liquidity (the type bernanke likes best).
Hey who cares? Stocks are up.
awesome comment
"The chart below demonstrates how something is very busted..."
I usually like her if she is "very busted."
I still can't see what the problem is with direct/indirect bidders. As US imports drop the amount of dollars foreigners get from us will decline so they'll have less to buy Treasuries with. Those dollars will stay in the US (i.e. will not be spent on Chinese stuff) and will be used to buy UST directly.
In other words, we go from this:
US consumer -> China -> UST,
to this:
US consumer -> UST.
US trade deficit shrank by $150 billion and internal savings rate shot up from 0% to 5%, and will likely climb higher.
So, it's mathematically inevitable that foreign purchases will decline.
Do not forget that all efforts towards paying down personal debt count towards the mythical "savings rate".
Right, US Consumers buy Treasuries just as soon as they are no longer unemployed.
<a href="http://stockmarket-news.weebly.com/" target="blank">What if We Held an Auction and No One Came?</a></p>
A speculation:
The mystery direct bidder is Treasury itself. The idea may have come from the treasury stock: Buy back (take it off the market) whatever you can't sell and call that a success.
Actually that's one of the reasons we want to audit the FED.
They may be responsible for some of the buying.
The question is when and if we audit the fed, Will we see Books #1 or #2
sometimes I get jealous. It would be so much easier if we didn't have to hide our dictatorship and state run economy
Shhh. I'm trying to watch this gripping nature documentary attempting to capture an epic struggle between the forces of deflation and dilution. However, there seems to be some biologist interfering and skewing Mother Nature's tendencies.
Classic heavy meddle.
Leadership. Morals. What's my cut?
Print, Print, Print...
Sovereign Debt Solutions Made Easy: Two Choices
...PK
Sovereign risk 'whack-a-mole' puts a bid in the dollar creating a selling opportunity for dollar-denominated assets.
The Chinese eyeing an economic downturn see the unification card as a good option for 'diversion'.
Ma's setbacks, as well as military sales to Taiwann, threaten that option.
Franron robbing Peter (buying deliquent) to pay Paul (to obviate guarantees) doesn't pack the 'monetization' punch needed to offset the selling.
So after some combination of Spain, Finland, Sweden, Norway, Portugal, France, Austria, Denmark, Belgium, Netherlands, UK & Switzerland, undergo their bear raids and the long term dollar swoon continues who exactly will buy our Treasuries?
Beuller? ... Beuller?
Flight of the arrow baby.
Interesting points, but can you make them a little clearer?
Flight of the arrow???
Google Mandelbrot.
Google Mandelbrot.
...so, via the Fed, we're eating our own shite...umm, tasty....
Who would be stupid enough to buy a 30 year treasury bond at that yield? Seriously
I'd need a 100% return on a 1 month T-Bill before I even CONSIDER buying US Govt. debt.
1. Us taxpayers,
2. Us Treasury,
3. Us Federal Reserve,
4. All levels of government in US,
5. various pension funds/insurance companies and
6. Japanese government using its soon to be worthless Yen to buy soon to be worthless US bonds, match made in heaven.
Pardon me while I vomit--I just saw Christine "Michelin Man" Rohmer on CNN shilling for Obama.
Not to worry,the Fed will bribe other entities to purchase what is needed to keep the country from devolving into anarchy.
The Fed can then exclaim "look,we sold everything!,it's ok,go back to watching Idol and whatever you do don't exit the market to buy gold-it's risky!".
I truly feel sorry for those who have the majority of their money/pensions in the market.
Buy gold,you will sleep like a baby and not have a care in the world.
HALLE-F**KIN'-LUJAH!!! It's ABOUT DAMN TIME.
The power of the Denninger Double Dog Dare :)
Good Articles: http://www.iamned.com
We think we can just print our way out of this mess
Since the middle of last year indirect biders have gone from 33% of the bid to 17% while direct bidders have gone from 2% to 16% (these are pct of total bids submitted not bids awarded). Bid to cover ratios have remained steady. There is a buyer who used to go through a primary dealer who is now doing his buying directly through the treasury. Some bond desk on the street has the answer to who this mystery buyer is because they are all of a sudden missing their biggest bidder. More than likely the big buyer used many primary dealers at the same time.
The one consequence I can come up with is that primary dealers will have less color than usual, so they may not bid as agressively which could cause auctions to begin to tail a few bps.
As far as the conspiracy goes... In order for China to boycott, and bid to cover to stay the same (as you are implying), China would have to tell the FED (as you imply) exactly how much they are not bidding, and the FED would have to fill the gap. I don't really believe they would do that. Therefore, I think it is a large buyer who got sick of using brokers and has decided to do it himself.
Don't you get it yet.
Direct take down can go to 100%
Nothing will change.
No inflation because the ever increasing amount of printed money is absorbed by the ever increasing amount of debt.
Brilliant.
"Just who are the Direct bidders?"
The direct bidders are the US banks!!! This is very simple. Direct bidders are only going to increase over the coming 5 years as the demand for safe US treasury bonds increases.
I am no bond expert, but I understand the balance of payments. China has to recycle its surplus somehow, they must buy something with their dollars. I wouldn't be amazed if the direct bidder is China.
But all that doesn't really make much sense. We now have a huge unknown buyer of treasuries, how unflashy is that?
The FED would buy through the Primary dealers and China would buy through GB and HK, why would they make it so complicated and show up as the huge unknown component?
The other day I said this would happen and if the last two days do not demonstrate it, I do not know what does. What is amazing is that the impact of China's leaving our long term auctions has not sunk into the snowbound brains of those in the corridor and if/when it does the horror will be sudden and hilarious if you're on the other end of the trade. China is sending a message and Bernanke is having to clean up behind our idiots in Congress. My money is on the Fed laundering the bid via the US Treasury Hedge Funds (C/BAC/AIG) who have "Caribbean Banking Center" operations.
Crisis will get worse: http://www.iamned.com good read
I hope everyone that posts this stupid spam crap gets the banhammer. F'ing idiots.
aswipe - I am with you on this one. I would not surprise me that the US gets into a war with Iran. In Southern California there have been large military supply convoys via railroad to Camp Pendleton. The base also appears to be building a larger dock facility. Supposedly, this is for the surge in Afghanistan. But it may be politically expedient to redirect public anger at an external adversary. Say Iran, North Korean, or maybe even China. A war with China would wipe out a large portion of our debt, and provide the excuse for build factories in the US to pummel China and all its excess manufacturing capacity into the stone age.
The paranoid side of me looks at a military build-up in Southern California and wonders if it is an external threat they are preparing for.
china not showing up... hmmm... try running CDR CH on bloomberg... it may provide an answer
Yo, smugness. I would, but I can't afford the $1600 a month. Why don't you do it for me and post it.
Wouldn't the Patriot Act work with the Fed, in lieu of an audit. The cops can just bust in without a warrant, or sneak around in the night when no one is home and they don't have to give notice to anyone that they were there. Isn't this exactly what the framers of the Constitution had in mind. Instead of employing an audit, just employ the Patriot Act and get the goods on the Fed. It might even work with Goldman.
Said it before and I'll say it again....10-30 year
supply is at a 30 year low. Stupidest trade on the
street is shorting the long end of the curve.
It's all part of the plan. Sell arms to Thailand, China retaliates, dollar plummets. Looks like things are working splendidly.
Side note: Can we get a captcha calculator?
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