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Record Direct Bidder Share And Near Record Direct Take Down Masks Indirect Shrinkage
Don't look now but the Direct Bidders once again saved the just completed 5 year bond auction. Not only was the $13.1 billion direct bid a record by a large margin (the prior record bid was $8.5 billion), not only was 12.8% take down the second highest since June of 2009 (versus an average of 5.6% since June), but the Direct share was a record 11.4% of total total auction (average at 4.5%). This masks the ongoing deterioration in the Indirect bid, which at $22 billion was almost $7 billion lower than the $28.6 billion last month. This is the smallest Indirect bid for a 5 Year since mid 2009, while the 19.1% Indirect share was the lowest since last April, coupled with the lowest Indirect takedown (40.3%) since last July.
All this merely makes the debate of who/what is the ever more prevalent Direct bidder so much more relevant.
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Sorry for asking -- what does deterioration in Indirects mean?
Generally means less buying by foreign CBs
China is no longer rolling their bonds through maturity. China quit buying when their market share was $800 billion. Therefor there is a "deterioration of indirect" bids. Thus the direct bid must buy the remaining bonds. The direct bidders are either "offshore" hedgefunds (operating in N.C.?), the Fed, peter pan, the teenage mutant ninja turtles, elvis, or China through Britain.
+1. The Chinese are asking, Do I look like Mrs. Obama? Then why are you trying to do sex to me like I was Mrs. Obama?
http://www.rightpundits.com/?p=5042
"Will you please take me to a dinner and a movie?" haha, i didn't know snl was funny again.
Hillarious but I think you forgot the accent.
"Do I rook rike Mrs. Obama? Then why are you trying to do sex to me rike I was Mrs. Obama?"
Have read on numerous other reports it's China buying via Britain. Hong Kong purchases are also partially offsetting.
or MB
Direct bids come straight thru to Treasury via PDs or directly.
Indirect bids are from foreign CBs and sovereigns via the NY Fed. Typically, this is the route for China.
Listen, someone track the size of the trade deficit versus indirects; I suspect you may find a correlation.
There are less dollars being shipped to recycle.
Oil consumption is another factor to look at...aggregate petrodollar volume is down because demand has decreased - but so has supply. This is an important trend to note for the treasury market (where budgets and debt always grow) against a dollar export to buy oil that is declining in supply against lackluster demand.
We kinda need oil to go to 120 to increase the petrodollar flow. Some of the indirects could be Ahabs
"We kinda need oil to go to 120 to increase the petrodollar flow. Some of the indirects could be Ahabs."
Ah, I like it! Let's fleece the middle class some more by taxing them thru higher gas prices so the Arabs can recyle that money back to Tiny Tim and Company. Tres cool.
The last acts of desperate men.
TD or anyone, these stats are more relevant yes, as for the remaining 47%, that went to PD's on behalf of domestic accounts or their book, right? Then, it gets puked or flipped in secondary.
It still feels like the overall market impact is markedly contained given this observation. Wouldn't there be something more evident in the markets if there was measurable concern ??? We're waiting.....
Thanks for the best research, market observations and analysis!
Demand falling................Supply rising...........................
Everyone likes their own brand, don't they?
http://www.youtube.com/watch?v=5110hk9W71E
man i believe that direct is concealing china. this is bullish, the differences b/w the directs and indirects is narrowing. see them as one i say. of course i am long so that carries a bias. compare PD's to the other two and its more reassuring as their over all reliance is waning. also the B/A ratio was strong. i will concede that i am worried about the declining take auction share of indirects but as stated earlier i believe china is being concealed thru directs. who else has that kinda flow.
Ahabs...take a look at our oil trade deficit.
At $80/bbl, we're importing 12mbpd..that's a $960Mx365 outflow.
The petrodollar deficit is bigger and always has been than China
so how come its happening now all of a sudden. china has a political reason now to go thru the direct channel whereas nothing has changed politically for the "ahabs".
"....Masks Indirect Shrinkage"
In a salute to my sophomoric tendencies, I thought the above was taken care of when Viagra was introduced to a rabid world?
I guess not.
Not when you're dealing with significant shrinkage...
SIGNIFICANT SHRINKAGE, JERRY!!
My all time favorite episode. You could see the distress in his face as those lines were recited. I always wondered if he was acting or not? He certainly appeared "experienced" in the matter.
But then again, all men are experienced in "shrinkage" so of course he wasn't acting.
Why does it matter to China (or us) that they purchase through indirects, rather than directs. If China buys the same amount, isn't Ben happy, even if he pays a little more interest through indirects?
I guess this is my question. Previously indirects took down 100% in the last 3 month auction or whatever it was. Now the direct bidders took down a large amount. The phrasing in both posts seem bearish to me. If someone could explain why both of these are bad things, I would appreciate it. I am somewhat familiar with the auction process, so I am sure there are others with similar questions.
I thought yesterday you guys were complaining that there were too many indirect bidders. now there are too many direct bidders?
too many indirect bids accepted(100%)
China...covertly buying T's....I doubt it. Remember the 500 billion from last year in the Household Sector....
Household Sector = Fed IMHO...
The other interesting feature this week has been the deteriorating BTC on the 1-3-6 auctions. Subtract the Fed's take from this auction and it does get interesting to see that foreign demand is seriously deteriorating and if we could ever find out the take of those "Caribbean Banking Centers" recently, that would REALLY tell the tale.
Ah, too bad that information is more top secret than our nuke secrets at a New Mexico Lab.
Utilizing Occam's Razor, I conclude that the increase in Direct Bids is due to MUCH higher public participation via "TreasuryDirect.gov".
Money Market Funds yield less than .1%, are uninsured and have recently had redemption limits imposed. Anyone having a dime in one should have their head examined.
Bank accounts and CD's are also yielding next to nothing -- approximately 75% less than pre-crisis. For seniors who rely on interest income, this is unacceptable.
Look for Treasuries to gradually replace Money Markets and Bank Accounts as savings vehicles.
Visit a grocery store or a gas station. See those prices rise.
Treserve is "buying" what they are pretending to "sell".
With the federal deficit much larger than the trade deficit, the gap between the two plus some is financed by Helicopter Boy's printing press.
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