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Record Direct Bidders Lead To Record Bid-To-Cover In Just Closed $32 Billion 7 Year Auction (3.078% Yield)
- Yields 3.078% vs. Exp. 3.103%
- Bid To Cover 2.98 vs. Avg. 2.75 (Prev. 2.85) - this is a record Bid To Cover
- Indirects 40.30% vs. Avg. 55.87% (Prev. 50.94%) - this is very weak
- Indirect bid cover at 72.7%
- Allotted at high 9.60%
- Direct taken down whopping 17.2% - this is also a record. Sold to the Fed, China, the Directs
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The magic US Global Credit Card is working with no limit...
Maybe we're looking at different data? Indirect covers at 73%? How does that show the card's still working? An audit will show where all of this money goes and comes from.
HILFE!!!!
Dear SWRichmond, I understand your point, but here I rather meant the very possibility to have over 2 times oversubscribed debt offerings regardless of who stands behind them - China, Japan, Russia or the American Taxpayer (without their explicit consent however). The fact is that we have not seen so far really failed Treasury auctions, do you not agree with that? With regards.
I suspect that at least some effort is given towards maintaining the perception of debt auction strength, by maintaining the bid-to-cover. Since we are in a perception-based system, this would seem intuitive. At some point the lying will intensify, and everything will appear completely normal, right before everything completely implodes.
It is hard to disagree with your words.
Direct bids = 17%?
On a 7-year?
Timmy says, "Oh, $hit!"
Gold has a song for Timmy and his DOELARRS...."Ill lite your ass on FIRE!"
Busta rhymes Ft Pharell - Lite ya ass on fire:http://www.youtube.com/watch?v=Qz-JBbExyOw&NR=1
The reality is that the trade deficits are shrinking...there are less dollars to recycle.
A phase transition is underway.
Think about how many less dollars are out there if oil production shrank from 85 to 82mbpd against a reasonably level price.
The new "excess" Directs = amount by which auction would have failed, were such a thing to be allowed.
Sometimes dogs eat their own puke out of embarressment, sometimes out of hunger, other times out of stupidity. Why is the Fed monitizing debt? We can also ask, why is the Fed eating it's own puke? The answer is above, take your pick.
Sometimes dogs eat their own puke out of embarressment,
==============
Weird. My dog puked up a bucket load last week on some dry mulch in the front yard. He turned his back to me, buried his head in the mulch and ate his own puke. I thought at the time he seem embarresed.
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AS I PASS through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.
We were living in trees when they met us. They showed us each in turn
That Water would certainly wet us, as Fire would certainly burn:
But we found them lacking in Uplift, Vision and Breadth of Mind,
So we left them to teach the Gorillas while we followed the March of Mankind.
We moved as the Spirit listed. They never altered their pace,
Being neither cloud nor wind-borne like the Gods of the Market Place,
But they always caught up with our progress, and presently word would come
That a tribe had been wiped off its icefield, or the lights had gone out in Rome.
With the Hopes that our World is built on they were utterly out of touch,
They denied that the Moon was Stilton; they denied she was even Dutch;
They denied that Wishes were Horses; they denied that a Pig had Wings;
So we worshipped the Gods of the Market Who promised these beautiful things.
When the Cambrian measures were forming, They promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed They sold us and delivered us bound to our foe,
And the Gods of the Copybook Headings said: "Stick to the Devil you know."
On the first Feminian Sandstones we were promised the Fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: "The Wages of Sin is Death."
In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: "If you don't work you die."
Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That All is not Gold that Glitters, and Two and Two make Four
And the Gods of the Copybook Headings limped up to explain it once more.
As it will be in the future, it was at the birth of Man
There are only four things certain since Social Progress began.
That the Dog returns to his Vomit and the Sow returns to her Mire,
And the burnt Fool's bandaged finger goes wabbling back to the Fire;
And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as Water will wet us, as surely as Fire will burn,
The Gods of the Copybook Headings with terror and slaughter return!
Yeah, well, your Mom.
Am a bit rusty yet here it goes...
GOLD.PRG
REAL MONEY
USE Hard Currency
SET CENTRAL BANKS OFF
CLEAR
DO WHILE ALIVE
STORE "gold" TO home
STORE "silver" TO office
STORE "peace" TO mind
STORE "value" TO finances
REPLACE Fiat Currency WITH Precious metals,;
Central Bank WITH Hard Money,;
Inflation WITH Value
@ all, times SAY the_truth
It is_time
EXIT
ENDIF
ENDDO
SAVE TO Always
CLEAR ALL
RETURN
EOF: remember.prg
do{ print() }
while( US$-- )
lol and my first thought was "Where did he declare his variables?" :)
In the declaration of variables section.
John Hancock used a 45 font there. So tough to read.
He's not declaring the state of the variables like integer, boolean, string. I figured it must be "stateless". After all without looking at the value of "mind" how will I know what state "peace" is? Sure the compiler will assign the most restrictive state to it but it's rougher for the reader, and could lead to comedy like 1 being a bit instead of cast as an integer. Didn't immediately think "stateless" language, because I don't work with stateless languages. So totally off on a nerd tangent, which is why I posted my first thought when reading it :)
dBase, APL, C++... learn it, live it, love it.
Hey, it is better than Compiles Only Because Of Luck (COBOL)! ;-)
lol I'm convinced COBOL will never die. My buddy tried to get me turned onto COBOL for the 21st Century (the book actually exists), and all I can think of is Duck Dodgers when he talks about it :) Space Age Stone Age, in the grim dark future there will be nothing but COBOL. I'm just grateful that most places are looking for guys who do stuff in VS, and primarily C# and VB.Net.
Sinking oil production upcoming is the war trigger, and there is not anything anyone can do about it.
Not being super-versed in economics (but learning very quickly and painfully), does this mean that buyers of US debt are demanding higher interest rates to finance our debt. Sorry if this is stupid question.
this is pure win, pure fucking win. great auction propelled by the dismal day but the longs have been rewarded and the shorts punished. you dont bet against the gov't that makes the money and the RULES. cry all you want but not only do we play by their rules but also in their park, w/ their equipment, and prob even uniforms. china is bidding thru directs as they still need to prop currency and shed risk. w/ the treasury offering 3.7% on the 10yr its a bargain.
Does this indicate that buyers of US debt are demanding higher returns on their investment? Sorry, I'm not a savvy economics fellow. But learning quickly and painfully.
No, not for this auction. "Direct Bidders" are coming out of the woodwork and buying and no one knows who they are. Lots of speculation it is the FED through some entity. Historically the direct bidder only accounts for a couple percent.
Foreign bidders not liking the long end of the Treasuries
and not buying except China (?) through "Direct Bidders"
so they can dump them quietly if needed. See below..
"Indirects 40.30% vs. Avg. 55.87% (Prev. 50.94%) - this is very weak."
15% is a big Indirect drop. And we still have the full $1.6
Trillion of debt to issue before FY10 is over in
September. Oh and we have to roll 40% of our existing
debt in the next 12 months. To whom might you ask?
Good question.
Better keep a trigger finger on your
401K/IRA sell button before they lock you up with
forced annuitization and you cannot get your money.
And don't forget SEC ruling to suspend money market
redemptions for an indeterminate period should
"emergency conditions" arise. Keep money in (DDA) Demand
Deposit accounts or bank deposit funds only!
It would seem to me the OP gave a good hint - directs (foreign central banks with deep pockets and a trade surplus to sustain, the Fed with the world's only bulletproof printing press, itself the only institution in the world that seems to know long treasuries is the world's safest investment and coincidentally one of the world's better bond investments) took down most of Treasury's asks, and timid indirects stayed on the sidelines, preferring to believe the black swan man's garbage about shorting treasuries.
So it depends which buyers. They're not all the same. And just because they belong to a category doesn't mean they act as one.
Interest rates are expected to go up, but not due to inflationary expectations rising. Rather, due to credit/default risk as the debt deflation spiral spins out of control....they gonna crash the plane.
Not knowing anything about treasury auctions, so what?
What does this mean?
And here we go, as if on queue, the PPT starts ramping-up the market within minutes of the close of this auction.
Just another glorious day in Workers' Paradise, comrades.
People ask on every thread aobut reading these tea leave. I am a non-finance professional, but I will take a stab at reading and making some inferences.
http://www.investopedia.com/terms/b/bidtocoverratio.asp
A Bid-to-Cover Ratio is a ration that compares the number of bids received in a Treasury security auction to the number of bids accepted. A ratio above 2.0 indicates a successful auction comprised of aggressive bids. A low ratio is an indication of a disappointing auction, marked by a wide bid-ask spread.
http://www.newyorkfed.org/research/current_issues/ci13-1/ci13-1.html
Primary dealers are institutions that have a trading relationship with the Federal Reserve Bank of New York; other direct bidders are financial institutions that place their bids directly with the Treasury. Indirect bidders are bidders that place their bids through direct submitters; this group includes foreign and international monetary authorities that place their bids through the Federal Reserve Bank of New York.
http://vixandmore.blogspot.com/2009/08/introduction-to-treasury-auctions...
http://seekingalpha.com/article/162859-analyzing-treasury-auction-results
I will take a stab at what this means (note I have no idea if I am right or not).
* Bidding was aggressive as compared to a norm
* Foreign entities (indirects) are continuing to buy less and less auctions and proxy buyers via the treasury (direct bidders) are buying more and more
* Yields are down
The bidding by directs was aggressively filling the slack created by indirects, thus pushing rates down. If you were a direct bidder, would you run down the return on your investment with so many auctions to choose from? Interest on the US debt is a big chunk of the US annual budget and you can finance infinite debt at 0% interest, so low rates are key to keeping the US debt party going. If interest rates shoot up, all hell breaks loose. Thus its implied this is the Fed buyer taking up the slack, and if true then we are directly monetizing our debt as foriegn governments buy less of it.
I dont understand what "indirect bid cover", "allotted at high", or "Direct taken down to" means as these didnt google very well.
I am trying to validate, so slap me around with facts if I got this wrong.
good job, you crazy coot, esp. on your analysis of why the Direct bidder might (must) be the Fed. I mean, I don't know, but that sounds plausible. There's always tomorrow's auction, or Monday's, Tuesday's, Wednesday's....."Indirect bid cover", you already explained - just the bid to cover for the Indirects. "Allotted at high," what % of the auction was sold at the highest interest rate. "Direct taken down" is the 17% of the auction the Directs went home with.
Need some help. Can someone explain "direct take down"? Thanks.
Best I can figure (because nobody knows for certain who are these mysterious direct bidders), the speculation is that the gubermint is buying their own poop. Drinking their own bathwater. Etc.
Which, I think, is sort of like paying-off your Visa with your MasterCard.
This is a remark from Deborah Blumberg at Dow Jones. Expains the implications fairly well.
http://online.wsj.com/article/SB1000142405274870382240457501953350929015...
"Key will be the amount of bids placed in each auction outside the primary-dealer system, made up of 18 large banks that trade directly with the Fed and are obligated to bid on U.S. government debt. That so-called direct bid is expected to remain robust, as investors—flush with cash at the beginning of the year—seek to put their money to work in the government-bond market without revealing their intentions to the primary dealers.
Typically, it is the auctions' "indirect" bid that market participants have a closer eye on; that category includes large institutions such as foreign central banks. The U.S. needs foreign bidders at its auctions because they hold about half of its debt outstanding—China and Japan are the largest holders of U.S. Treasurys.
But since November, some large domestic and foreign money managers, which typically bid at Treasury auctions through primary dealers, have instead placed bids directly with the Treasury.
More direct bidders make it harder for primary dealers to gauge interest in auctions from customers and raise the risk that dealers' interest in the auctions could wane. Worst case, that uncertainty could drive down demand at Treasury auctions at a time when the government is auctioning large amounts of debt, forecast for this year at more than $2 trillion, to cover its budget deficit.
In the first government-bond sales of the year, two weeks ago, direct bidders took a record 23% of the three-year notes on offer and 17% of the 10-year notes, the highest amount since May 2005.
Still, it is too early to say just how long the robust direct bids might persist, said Adam Brown, managing director of U.S. government-bond trading at Barclays Capital in New York. "We don't have enough data points to say whether a true trend is forming," he said.
He wouldn't be shocked to see direct bidders take another big chunk of the Treasurys up for grabs this week, but wants to see if that demand continues next month as well before drawing any firm conclusions.
If the demand is coming from a new bidder with staying power—a foreign central bank that hasn't typically been a big player in the market, for example—that would be a boost for the bond market, Mr. Brown said. The Treasury doesn't break down its direct-bidder category, but a jump in foreign buying of U.S. government bonds would be evident in its monthly report on foreign capital flows.
However, the direct bidders could also be asset managers that used to bid through primary dealers. In that case, Treasury auctions and the bond market in general could become much more volatile."
I don't see how you can distinguish whether the Fed is monitizing or not by looking at the direct vs. indirect bidders. Couldn't the Fed arrange both direct and indirect bids with the aid of foreign banks (or hedge funds, for that matter) by using swaps?
For a primer and a look at the Feb 23rd auction:
http://seekingalpha.com/article/190362-something-very-strange-is-happeni...
No matter how odd the auction was, someones bough alot of wothless paper. Like the way the market has promptly recovered post auction after corralling the suckers into a "safe haven" no matter how bad the news has been today.
SET: Yieldon30YearTarge=0;
SET: DJIA2012=15000;
Loop:
IF USDollar<70, Sell=GOLD
IF USDollar>85, Buy=USdollar;
IF RIOTS =1, Fire=Obama,Hire=ScottBrown;
End
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