Record Treasury Supply On Deck: $116 Billion In Bond Issues, $182 Billion Total; Will Debt Ceiling Be Breached Next Week?
The Treasury has released the line up of Treasury issuance for next week and it is a stunner: in the week of October 26th alone, the US will issue $116 billion in new Treasury Notes (2,5 and 7 Years), another $30 billion in Bills and $7 billion in TIPS. As pointed out earlier, there is about $150 billion in availability before the Federal debt ceiling is breached ($12.1 trillion). This likely means that Geithner will have to resort to some last minute tricks to make this full upcoming issuance legally permitted.
From Treasury Direct:
- $29 Billion in 91 Day Bills, October 26
- $30 Billion in 182 Day Bills, October 26
- $7 Billion in 4.5 Year TIPS, October 26
- $44 Billion in 2 Year Notes, October 27
- $41 Billion in 5 Year Notes, October 28
- $31 Billion in 7 Year Notes, October 29
Total Bonds: $116 Billion; Grand total: $182 Billion, ($150 billion Bond Ceiling Window).
(3 votes)
on Thu, 10/22/2009 - 11:43
#106933
Just how much are they going to raise the debt ceiling. Surely they aren't going to want to do it again right before the election ... So ... it'll have to be raised by a chunk.
Don't worry. It's just our money that going down the drain to feed their spending addiction.
on Thu, 10/22/2009 - 11:53
#106948
I agree with you... if those that truly follow this are going ballistic on ANY increase, whay not just raise the ceiling to $20 trillion?
Sure, the dollar will go down on the news, but it's going to go down anyway... one way or another.
I know it irresponsible to think that way... but I cannot imagine that there are a few in Congress thinking exactly the same way.
on Thu, 10/22/2009 - 12:50
#107013
Or just take the cap off entirely. Is there something in the Constitution that says there has to be a cap? Honest question.
If not, just remove it, it's a joke anyway, and just causes unnecesary work.
on Thu, 10/22/2009 - 13:30
#107083
"Is there something in the Constitution that says there has to be a cap?"
classic
on Thu, 10/22/2009 - 13:50
#107120
What's a constitution? Is that like when I have to go real bad?
on Thu, 10/22/2009 - 17:31
#107479
No, it's the thing that Bernanke and Geithner use AFTER they go to the bathroom.
on Thu, 10/22/2009 - 19:36
#107643
Given that it's already got Bush and Cheney'scrap all over it, i don't think even scum bags like Bernanke and Geithner would touch it.
on Thu, 10/22/2009 - 11:44
#106935
At some point $100B in T-bill issuance, in a week, just doesn't seem to be all that much anymore.
Sad.
on Thu, 10/22/2009 - 19:56
#107663
At some point, one of these auctions will blow sky high.... at that point $100B will seem like alot.
Geithner/Bernanke will be served a giant shitburger and maybe Congress will wake up and take notice.
on Thu, 10/22/2009 - 11:51
#106945
I don't understand why this is not getting more attention.
http://uk.reuters.com/article/idUSTRE59K01420091021?pageNumber=1&virtual...
This is just outrageous. How is the Fed allow to take this trash as collateral? I understand they bend the rules to classify Fannie and Freddie debt at "government agency" debt, even though it is not, but a shopping mall?
on Thu, 10/22/2009 - 12:04
#106961
From the linked article.
That money was secured by a portfolio of Bear assets. Crossroads Mall is the only bricks and mortar acquired through bailout. The remaining billions are tied up in invisible securities spread across hundreds, if not thousands, of properties.
It is hard to be precise because the Fed has not published specifics on what it now owns. The only reason that Crossroads Mall has surfaced is that it went into foreclosure in April.
Noah Diggs, who had just successfully concluded a search for work here as a shop assistant, was surprised and somewhat alarmed to learn the U.S. central bank now owned the property.
"That is a bad thing, right?" he said, surveying the empty parking lot on a rainy morning in early October.
This is so sad on so many levels that I don't even know where to begin. So I won't.
on Thu, 10/22/2009 - 12:20
#106982
Under questioning from Robert Casey Jr., a Democratic Senator from Pennsylvania, Mr. Bernanke said Wednesday that the assets making up the Fed’s collateral were “entirely investment grade, entirely current and performing.” He said BlackRock, which the Fed has hired to manage the collateral, is “confident, or at least reasonably confident, that we would be able to recover the full amount.”
Their "reasonable confidence" gives me a warm and fuzzy feeling...
http://dealbook.blogs.nytimes.com/2008/04/02/bernanke-bear-and-the-chaot...
on Thu, 10/22/2009 - 13:47
#107113
Oh great... our collateral is solid... because the Rating Agencies and Blackrock tell us so????
I think Uncle Ben has been abducted by aliens.
Again.
on Thu, 10/22/2009 - 22:16
#107831
I love that little "or at least reasonably confident" hedge in that statement.
The fact that they're hedging speaks volumes about how much they're pooping in their pants about how long they'll be able to "extend and pretend" before the whole house of cards comes tumbling down.
on Thu, 10/22/2009 - 13:31
#107084
The sad thing is that this is probably the hardest asset currently backing our currency.
on Thu, 10/22/2009 - 13:33
#107090
well, it does have the word 'Rock' in there...
on Thu, 10/22/2009 - 18:27
#107567
Holy shit.... no wonder why they're buying all the mortgages..... they own the country.
on Thu, 10/22/2009 - 11:58
#106953
Geithner's the MAN...! He always comes through and gets us our money...!
on Thu, 10/22/2009 - 12:02
#106958
Oh please, can we stop using the words "Debt Ceiling"???
There is no ceiling.
on Thu, 10/22/2009 - 17:09
#107430
I agree. There is no debt ceiling in practice, and the one stated is phoney and several tens of trillions less than the real debt anyway.
on Thu, 10/22/2009 - 12:08
#106965
I wonder who has the oil in that shopping mall?
on Thu, 10/22/2009 - 12:10
#106968
next week should be very interesting. record treasury issuances coming, but Fed has officially run out of QE authorization as of yesterday - who is gonna buy when the Fed has purchased literally half of all issuance this year.....?
on Thu, 10/22/2009 - 12:48
#107010
Easy - the Fed's owners, the banks, will have to step up and buy themselves. And they will.
on Thu, 10/22/2009 - 12:51
#107021
If the banks do that, then they'll have to sell equities
on Thu, 10/22/2009 - 14:08
#107151
exactly. the balance between risk and non-risk has been thrown way out of whack by Fed. something has to give. if money doesnt come out of risk, then the reference rates for the economy (treasury yields) go shooting up. then people will be drawn to them, in which case money has to come out or risk.
of course, in the next week, Fed will announce QE 2.0 and Govt will announce Cash-4-Prostitutes.
on Thu, 10/22/2009 - 12:14
#106973
I guess goo fo JD. No wonder they don't want an audit,then people will know what was also good for JM,BF,KL,and what is the other guy in the west coast?oh,by substitution,what was also good for WB.........
on Thu, 10/22/2009 - 12:19
#106980
I'm suprised the dollar didn't bounce on this news. It shot up after that shitty unemployment report. What's it waiting for?
on Thu, 10/22/2009 - 12:23
#106985
Tyler - nitpick: you say "...another $30 billion in Bills...", I believe it should read "$59 billion"...?
on Thu, 10/22/2009 - 12:43
#107005
How much of this is rollover?
on Thu, 10/22/2009 - 13:09
#107048
There is $149 billion maturing next week:
CUSIP 912795P26 matures 10/29: 125.7 billion
CUSIP 912828HF0 matures 10/31: 23.8 billion
Note $172 billion matured today. That is $40 billion more than was auctioned this week (60 on Monday, 57 on Tuesday, 15 yesterday).
on Thu, 10/22/2009 - 12:50
#107014
At what point does Bernanke end on the TV show "Intervention"?
on Thu, 10/22/2009 - 13:33
#107088
kick-ass.
I can just see it.
Thank you for that one.
on Thu, 10/22/2009 - 13:02
#107040
'legally permitted'... I realize this is going to sound overtly skeptical, but when did we really start thinking it matters to these guys whether what they do is 'legally permitted'?
on Thu, 10/22/2009 - 13:22
#107070
Is the Fed going to try to reverse repo treasuries while the US Treasury is issuing new ones as well?
on Thu, 10/22/2009 - 13:23
#107071
Thank God for electronic banking..... Otherwise the Fed would have to introduce the tiny Tim million dollar bill or the daffy duck billion dollar bill.
I believe the largest paper currency bill is a $10,000 dollar bill (I have personally have never seen one), the buyers would have to bring some very large suitcases to the auctions...
on Thu, 10/22/2009 - 14:21
#107174
And who's on the $10,000 bill you may ask? A fantastic story from history.
The story of Salmon Chase.
Salmon Chase was the Secretary of the Treasury under President Lincoln from 1861 to 1864. This period witnessed two great changes in American financial policy, the establishment of a national banking system and the issue of a legal tender paper currency. The former was Chase's own particular measure. He suggested the idea, worked out all of the important principles and many of the details, and induced the Congress to accept the idea.
Years later, he would become a justice on the Supreme Court and those same legal tender laws that he had helped draft, would come before the court. In Hepburn v. Griswold (8 Wallace, 603), 1870, certain parts of the legal tender acts were found to be unconstitutional. When the legal tender decision was reversed after the appointment of new judges, in 1871 and 1872 (Legal Tender Cases, 12 Wallace, 457), Chase prepared an epic dissenting opinion.
"The legal tender quality [of paper money] is only valuable for the purposes of dishonesty."
In my opinion it is probably the finest argument ever voiced against paper money.
http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=79&invol=457
http://altlaw.org/v1/cases/405884
http://vimeo.com/3722256 (go straight to 15:15 if you're in a hurry, but the whole video is required watching)
on Thu, 10/22/2009 - 17:34
#107485
I know a shitload about central banking history, never knew that. Thank you for that information and posting the sources to learn.
on Tue, 10/27/2009 - 18:52
#112425
Natch. Thank you for the kind words sir.
on Thu, 10/22/2009 - 13:38
#107097
TD not all of these issues is new debt - you have to factor in the maturing amounts, so they are probably still under the ceiling, but certainly will be over the limit by Mid-Nov...
on Thu, 10/22/2009 - 13:43
#107107
Isn't this getting interesting. We have the Fed losing liquidity in "Tomotillo", about $55.763 Billion. Not only does the Fed have to make up the maturing, but they have to deal with the new issues, right? What does this require up for next week - It has to be MBS as the conduit for funding it under the table, POMO ain't gonna cut it. The maturing should help Timmaw offset bringing the net increase to only $61 Billion. Am I OK or completely fried from dealing with S/N and cabling with our Internet/Satellite connections today?
on Thu, 10/22/2009 - 14:22
#107176
hmmm...well just to put a different take on this. a long only bond manager places bets in the form of part year duration on parts of the maturity curve (e.g. 0.5 year long the 5-7 year maturity bucket against 0.5 year short the 7-10 year bucket). This is done to express a view on slope and risk. Let's take a leap here. There are two requirements for a short only debt manager. He knows how much he has to borrow and he would like not to keep doing it, if he thinks he will flood the market with his name. The US Treasury/Fed have a problem. They require long term funding of say 30 trillion at, say, the 20 year duration point. The risk of this is equivalent to the ten times this or 300 trillion at the two year duration point. Suck the cVaR out of that one! How come the Government/Fed/BIS can hold everybody to a VaR limit yet the largest borrower doesn't have to? Secondly, the big bet has to be a financial risk of 1) the Government curve going above the corporate curve, since corporates are a better credit risk and secondly, that the Treasury can only only issue at the short end, since no-one will buy long dated debt with the duration risk. This means that the yield curve is about to reflect a "banana republic" inversion with short term rates around Volcker like 15% and long term rates probably a few percent lower.
on Thu, 10/22/2009 - 15:56
#107317
hooligan,
if that secnario unfolds what are the first moves that the bond market
gives that this is about to really pick up steam?
on Thu, 10/22/2009 - 17:16
#107442
I presume the Fed will continue to purchase agency debt from the chinese, japanese and arabs...who will in turn use the freshly minted money to buy treasuries.
The Fed is doing its best to create the illusion it is not monetizing the Treasury's debt.
This is a revolting ponzi scheme...but rather entertaining to watch.
on Thu, 10/22/2009 - 17:26
#107468
When Money Dies: The Nightmare of the Weimar Collapse
by ADAM FERGUSSON
WILLIAM KIMBER BOOKS
LONDON, 1975
http://mises.org/resources/4016
on Thu, 10/22/2009 - 20:24
#107703
Cant hide a pig in the chicken koop.
The national debt has again accelerated-since jan 09 we have been turning round 1.4-1.6 mpm accelerated to 2.3 mpm in june/july---we have now entered the CERN acceleration phase of 3.8 mpm/228 mphr/3.8 bpd.
National debt is at 11 trllion 972 billion with breach date of the big 12 within 7-9 days--my old forcast of nov 6 has been blown out of the water.......
Would a 12 trillion$ bond issue be out of the question --would someone through me a toilet seat-I need a life preserver.
on Fri, 10/23/2009 - 11:57
#108338
´Hello
on Sun, 10/25/2009 - 00:20
#109878
So what is the best way to profit from this insanity!?
on Mon, 10/26/2009 - 12:52
#110704
BYE BYE TO THE RALLY IN OCT 29 (300B treas. purchase program ends)
When the long term treasury 'give away' ends, so the stock rally, both started the same date both will die together..
Unless Bendover Bernanky dig a BIGGER HOLE extending the 300 Billion purchase program. In 10 years US wont be able to pay the debt service, and then fiacial Armaggedon again.
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