Second Consecutive Record High Bid-To-Cover Auction Closes As Treasury Sells $29 Billion In 7 Year Bonds

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Thu, 05/26/2011 - 13:25 | 1313693 ghostfaceinvestah
ghostfaceinvestah's picture

Looming end of QE = increased bid for USTs, what a surprise (to some)

Thu, 05/26/2011 - 13:53 | 1313744 Boston
Boston's picture

I'm at a crosssroad right now.  Seems like there's short-term support at around 3.05% (10-year).

I'd like to see the yield back up to 3.3% or 3.4%, so that I can go all in again, for the ride back down to sub-3.0%.

But I'm concerned that support doesn't hold.  And the closer we get to the end of QE2, the sooner we break below 3.0%.

As much as I'd like to double dip on this trade, I'm more concerned about not missing the big ride down!

BTW, I wonder WTF Bill Gross is thinking right now, after being on the wrong side of the 10-year's collapse from 3.65 to 3.05?  Yikes!

Thu, 05/26/2011 - 13:27 | 1313699 LawsofPhysics
LawsofPhysics's picture

My oh my, indirects are coming back.

Thu, 05/26/2011 - 14:32 | 1313891 Dejean Splicer
Dejean Splicer's picture

My oh my me oh, indirects are where it's at. I hope Tyler was only shitting about his short exposure. His dullar long is working nicely.

Thu, 05/26/2011 - 13:27 | 1313701 trav7777
trav7777's picture

what a joke...record BTC for the debt issuance of a bankrupt State

Thu, 05/26/2011 - 13:32 | 1313707 LawsofPhysics
LawsofPhysics's picture

Suckers around the world born every minute.  Wait what?  infertility problem? oh no, check that.

Thu, 05/26/2011 - 13:36 | 1313717 SDRII
SDRII's picture

By around the world I assume you are alluding to the

Caribbean banking centers - cough cough

Thu, 05/26/2011 - 22:33 | 1315335 Yen Cross
Yen Cross's picture

 Alright nigga`h lets catch the bad guys/gals.?

Thu, 05/26/2011 - 13:30 | 1313708 Greater Fool
Greater Fool's picture

Looks like the meaning of "extended period" is in the process of extending.

Thu, 05/26/2011 - 13:35 | 1313719 Dr. Engali
Dr. Engali's picture

Nothing like a negative real rate of return.

Thu, 05/26/2011 - 13:37 | 1313724 Greater Fool
Greater Fool's picture

Not for the guys who bought 7Y last month 25bp cheaper.

Thu, 05/26/2011 - 13:43 | 1313748 LawsofPhysics
LawsofPhysics's picture

exactly,  plus for many, this may turn out to be much "less" negative depending on much more "extending" can be done.

Thu, 05/26/2011 - 14:06 | 1313822 Dr. Engali
Dr. Engali's picture

One month doesn't make the investment unless you are flipping the issue. But if you are a coupon clipper you are gonna get killed.

Thu, 05/26/2011 - 14:39 | 1313910 Greater Fool
Greater Fool's picture

If you're a coupon-clipper, then price fluctations on the bond itself make no difference and you should take the longest duration you can find, collecting the premium on a risk you don't care about.

Thu, 05/26/2011 - 15:20 | 1314001 Dr. Engali
Dr. Engali's picture

It kills you in the sense that you get a negative rate of return on your money due to inflation. Sure you get your principal back but it will buy a lot less in the future. Not to mention your 2% coupon is about 4% under the real rate of inflation. It's a lose lose scenario.

Thu, 05/26/2011 - 13:35 | 1313731 wombats
wombats's picture

So when does the Treasury bubble burst?


Thu, 05/26/2011 - 13:41 | 1313735 LawsofPhysics
LawsofPhysics's picture

when everyone walks away. Need to have another game in town first.

Thu, 05/26/2011 - 14:17 | 1313857 SheepDog-One
SheepDog-One's picture

Like a world war breakout for example.

Thu, 05/26/2011 - 15:00 | 1313957 the rookie cynic
the rookie cynic's picture

Or when the dollar is worth 1/100th of its present value?

Thu, 05/26/2011 - 19:54 | 1314911 AUD
AUD's picture

When the potential 'profit' is no longer outweighs the risk. There's still room at the long end. With last month's 7 Year of 2.71%, & this latest pricing at just 2.43%, seems there's 'money' to be made in bonds.

Thu, 05/26/2011 - 13:38 | 1313732 buzzsaw99
buzzsaw99's picture

Nobody wants to follow Bill Gross in the charge of the bond vigilantes. lol

Thu, 05/26/2011 - 13:42 | 1313757 SkySavage
SkySavage's picture

I can't wait to see his reaction to sub 3% yields on the 10y.

How's that short position working out Bill?

Thu, 05/26/2011 - 13:42 | 1313758 dbradsha
dbradsha's picture

Easy really - the FED is just getting overseas banks to buy on their behalf.

Thu, 05/26/2011 - 13:42 | 1313760 Moric
Moric's picture

Where does Tyler get that bid/cover graph from? and can it be gotten for before 2003?

Thu, 05/26/2011 - 13:50 | 1313782 plocequ1
plocequ1's picture

He got it from Adobe. Stock symbol ADBE

Thu, 05/26/2011 - 13:56 | 1313786 Vincent Vega
Vincent Vega's picture

So the higher the price goes (lower yield) the more people want them??? I don't get it; what am I missing?

Thu, 05/26/2011 - 14:22 | 1313865 SheepDog-One
SheepDog-One's picture

Banks now just gambling that the FED will bail their bonds out. Just a casino of drunks.

Thu, 05/26/2011 - 14:43 | 1313912 Vincent Vega
Vincent Vega's picture

Thanks SheepDog, I got it now: The Fed will auction off bonds to buy the bonds that they auction off...genius! That should work really well until......  hey, wait a minute...WTF???

Thu, 05/26/2011 - 13:54 | 1313792 GOSPLAN HERO
GOSPLAN HERO's picture
I joined the party because I was a revolutionary, not because of any ideological nonsense. -- Hermann Goering 
Thu, 05/26/2011 - 14:12 | 1313830 kito
kito's picture

not buying the argument that bond strength is actually weakness. face it, our bonds are in demand, and will be for a very long time.

Thu, 05/26/2011 - 14:23 | 1313868 SheepDog-One
SheepDog-One's picture

Right....because WE have the best printing presses around!

Thu, 05/26/2011 - 14:28 | 1313878 kito
kito's picture

tis true, and not to mention that our word to our bondholders is rock solid-to hell with the public pensioneers, bonds must be paid!!!!

Thu, 05/26/2011 - 14:41 | 1313905 What_Me_Worry
What_Me_Worry's picture

I cried uncle and sold off my TBT.  My brain just can't handle it anymore.

You win, again, Fed.

Thu, 05/26/2011 - 22:22 | 1315313 Yen Cross
Yen Cross's picture

 vHand me to the n thread.

Thu, 05/26/2011 - 22:20 | 1315316 Yen Cross
Yen Cross's picture

 What a joke =. Pork on Ice.

Thu, 05/26/2011 - 22:23 | 1315320 Yen Cross
Yen Cross's picture

  Feds r computers. Children. P..S. I'm  on your side! Deadf fish s`tyle.

Thu, 05/26/2011 - 22:28 | 1315325 Yen Cross
Yen Cross's picture

 PS dot lost. China is stealing everything. I'm fed (PISSED)

Thu, 05/26/2011 - 22:30 | 1315331 Yen Cross
Yen Cross's picture

 GMT 2 makes sense.

Fri, 05/27/2011 - 00:19 | 1315542 hamstercheese
hamstercheese's picture

Will someone please explain the nomenclature used here..what are direct bidders, what are indirect bidders, what is bid to cover ratio?  Definitions please so I can digest, thanks in advance...

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