Treasury Fat Finger?

Tyler Durden's picture

Today, just after the TIC data was released, there was a major sell off in the 10 Year. While some attribute the move to the disclosure which Zero Hedge pointed out first that China had sold $11 billion in Treasurys in November, this should not come as a surprise: we have been claiming for months now that the primary goal of QE 2 is just as much to push stocks higher as it is to replace China as a marginal buyer of Treasurys (although China could easily be buying bonds through the UK - truth is until Ron Paul asks Tim Geithner we won't know). And while this could certainly be a factor, the latest rumor is that there was in fact a Tradeweb fat finger, with some novice (and now recently unemployed) trader putting in a sell order for $6 billion instead of $6 million. The result is presented below. Of course, if we were a sellside advisory we would say nevermind the facts, the reality, and the market manipulation, and just buy the dip. Nevermind that market liquidity across every asset class today is non-existent, and as Citi results demonstrated there has been a complete and utter collapse in trading in the last quarter. Alas, ongoing manipulation whose sole purpose is to fool the greater fools back into the market, is failing, meaning the close loop will continue a little longer... until Chaos theory confirms that not even Ben Bernanke can hold an infinitely multivariable equation together.

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vote_libertarian_party's picture

Why is it a problem that China is cutting back?  The TIC data shows England is a big buyer and picking up the gap.


Their just as flush with cash as China...ohhhhhh...that does seem a little...un-nerving.



hedgeless_horseman's picture

The BOE's "margin account" is indeed flush with Irish assets.  What is there to worry about?

More Critical Thinking Wanted's picture


although China could easily be buying bonds through the UK - truth is until Ron Paul asks Tim Geithner we won't know

LOL, do you really think that Ron "we need no stinkin' market regulation" Paul will lead to ...  more regulation that enforces transparency in the markets? :-)

That guy does not even want a central clearing bank nor guaranteed deposit insurance.

In reality Ron Paul's policies would lead the US back into the medeival times: when the big banking families ruled absolutely everything, when the government had to run to the rich families for bail-outs and not the other way around ...

In those golden, unregulated times they did not have to worry about 'disclosure' or 'transparency' - it was all their private property and their own private contracts, it's no-one's business what they were doing, right?

ZH would not exist in such an extremist "no regulations" environment that Ron Paul envisions - only a hand-picked few would get access to some data.

How ironic!


citizen2084's picture

Why were the people in the rest of the world in such a hurry to get here if it was such a medieval feudal state?

Would you say that the regulated environment has prevented the banking familiesform ruling everything? Who do you think authors regulations?

In a Ron Paul's world we have sound money, private property rights & free markets. These create wealth which is why the farther we have gotten form them - the poorer we are. 

You absolutely paid attention in your college classes - you have the left's inaccurate view of American history and ECON.  


More Critical Thinking Wanted's picture

Erm, a free history lesson for you: the USA did not exist yet when the medieval period ended. So yes, I meant medieval Europe.


Red Neck Repugnicant's picture

If human labor is the wealth of a country (see Adam Smith), and wealth is arbitrarily tethered to gold, how can a growing country realize the potential fruits/wealth of its labor under the rigidity and constraints of a monetary system anchored to gold and to those who control/own that supply?

PierreLegrand's picture

Nothing to see here move along...

unwashedmass's picture


what seriously pisses me off is the manipulation of gold and silver to prevent any of the peasantry from saving themselves from this catastrope.

SilverIsKing's picture

Actually, just the opposite is true.  The manipulation and price suppression have given many people the opportunity to buy gold and silver at prices that they would not have otherwise been able to afford.  This assumes we are discussing physical metal and not the paper variety of course.

Yancey Ward's picture

Seriously, if you believe in your thesis, just buy the physical and hold it.  Nothing is preventing you from saving yourself but yourself.

gdogus erectus's picture

It's so true.  I noticed that PM's are always driven down during the release of poor economic data or a big equities decline.  The sheople always look at gold during these events and say, "Gee, I guess PM's aren't safe either!".  Then gold and silver are allowed to float back up on days when the market is ripping - no one notices.  This is how PM's have been on a 10 year run with 99% of the masses not noticing.

Well, that and the media playing along.  Have you ever noticed that on big up days for gold, CNBC only shows the price quote every 3 minutes but on down days they show it every 20 seconds?  I'm sure it's just a coincidence. 

buzzsaw99's picture

China is bailing out Europe so the bernank won't have to. More palatable back home. It's all a big show.

topcallingtroll's picture

China talks a big game but they are tight with their money. They offered what? 3 billion to portugal? The chinese are all talk.

buzzsaw99's picture

True. They also talk down usa dollars but cling to them like gold. Funny dat.

topcallingtroll's picture

Chaos theory or complex systems will humble anyone with the hubris to prognosticate. Hubris has destroyed many, Tyler.

DarkAgeAhead's picture

What if I prognosticate chaos? 

Spalding_Smailes's picture

The treasuries will be purchased .......... Cdad. 

....... "Before I get into that, I suppose by now everyone has noticed that China is trying to diversify its reserve holdings and is reported to be buying more Japanese yen and Korean won, and perhaps other currencies.  In my entry six weeks ago, I argued that the fear that China could disrupt the US Treasury market by dumping dollars was totally unreasonable.  The latest news support my argument, I think.  First, it is pretty clear from the recent performance of the market that the vigorous attempt to diversify PBoC holdings has had no disruptive affect on the US Treasury market.

It cannot.  The world has a problem of too many countries eager to increase their export of savings and too few increasingly reluctant countries importing savings.  Too-little foreign financing won’t be an issue for the US Treasury, it is too much foreign financing that the US must worry about.  As if to prove the point, the Financial Times had an article Wednesday with the title: “Foreigners flock to buy US Treasuries.”  I am pretty sure they will continue “flocking” for many more years.

Second, even the small moves into won and yen are causing consternation in Japan and Korea.  For example, Saturday’sFinancial Times has this:

Japanese prime minister Naoto Kan on Friday said he was ready to take “decisive” action on the yen, and urged the Bank of Japan to implement “expeditious” monetary policy measures.

…The government is under increasing pressure to stem the rising yen, which threatens the country’s economic recovery. His remarks suggested that the central bank could soon introduce additional easing measures to tackle the waning economy.

I pointed out in my piece six weeks ago that if the PBoC switches from dollars to some other currency, one of two things must happen.  Either the recipient country buys dollars to keep its currency from surging, in which case the US gets the money anyway, or the US trade deficit will be transferred to the recipient country, which will cause trade tensions with China.  Wednesday’sSouth China Morning Post already has the Japanese financial authorities threatening intervention because the rising yen is hurting exports — although apparently it is not just PBoC buying that is forcing up the yen." .....

Spitzer's picture

The Fed is the biggest holder of US treasuries.


Did you get that ?

read it a few more times....

The Fed is the biggest holder of US treasuries, the Fed is....

Spalding_Smailes's picture

Bingo -

And China is the biggest holder of renminbi debt/npl/local ect, ect .... Ben is in total control.

Zeej's picture

Good to see this hear.  A different perspective

Bam_Man's picture

It is just another manifestation of "casino-like" action, which we now have in all asset classes.

Lose your shirt on that huge downdraft in Treasuries? Go get another cash advance, step back up to the table in a few minutes and double down.

Red Neck Repugnicant's picture


[(market wants) + (Bernanke influence)]time = (market wants)^2(C)


Edit in:  Yes, you're correct in junking this.  I forgot the speed of light constant (C) - significant error, indeed. Please note how (market wants) is squared, rather than the speed of light.  If Einstein were an economist living under the Bernanke/Greenspan/Congress trifecta, I believe he'd concur. 

thepigman's picture

Given how it went absolutely wacky, a fat finger

makes some sense. Course since every asset

class on the globe is manipulated by the

Fed, who the hell knows?


Tortfeasor's picture

Fat finger makes no sense.  Trades work in numbers, not words.  Same bullshit as during the flash crash.  If my broker used words instead of numbers, they'd be fired.  It's absurd.

"Sell:  one hundred thousand shares of Apple at three hundred twenty dollars and sixty-seven cents per share"  C'mon man!

thepigman's picture

Okay...give you the alternative. Sack

got his ass kicked on the 10 and 30

by someone large and aggressive.

Ancona's picture

England can't even afford theri own bills, why in the hell would they be buying our debt?

Me thinks that teh good old USA is shipping cash to england to be sent right back to the treasury. What a load of crap. Then, everyone whistles and looks the other way.

youngman's picture

and it makes our auctions look "successful" also.....what a bunch of crap.....

Cash_is_Trash's picture

Then Au and Ag should take off as the paper currencies of the world become a novelty item at an antique store, just like the other currencies!

This stock martket has little to do with investment and great deals to do in speculation!

LawsofPhysics's picture

Damn that complex environment with its interconnected complex cycles that the weather and life depend on!

The only thing that really moves our current economic model is cheap resources and cheap labor NOT cheap fiat paper.  Not the most sustainable model now is it?

SheepDog-One's picture

And equity markets dint flinch oven .001%, stuck in a computer feedback loop-
Any data-purchase equity higher-repeat.

Spalding_Smailes's picture

Grab a kazoo ... The dance floor is packed now. Sack just did the moonwalk & byron wien is leading the line dance ... 

merehuman's picture

and the chairs are dissappearing...  when the music stops.....Oh ..o

whatz that smell's picture

IF: fat finger(n)

THEN: buy(fukingdip)

ELSE: unleash food riot(country x)


Oh regional Indian's picture

So let me understand this. Complex computer systems, trading millions, or is that mbmbmbmbmillions of bonds, do not ask the "Are you Sure you want to sell 6 billion 10sies" to the fat fingered newby?

i find that really hard to believe. All fat finger theories are hereby summarily rejected.


alexwest's picture

@Oh regional Indian

exactly... that jsut hogwash..


reading's picture

It's quite hard to believe they don't have a risk control that limits any one traders one block sell or purchase...seriously you risk that kind of money based on one traders order entry skills?  I find that hard to believe even at these piece of crap PD's/banks/whatever.

buzzsaw99's picture millions, or is that mbmbmbmbmillions of bonds, do not ask the "Are you Sure you want to sell 6 billion 10sies" to the fat fingered newby?



I accidently sold like 300 million shares of crAAPL this a.m.. Yes, that was me.

Oh regional Indian's picture

Buzz, I can see that avaatar of yours having a fat finger! :-)


vote_libertarian_party's picture

Maybe China is playing good cop - bad cop.


good cop = new GE contracts announced this morning

bad cop = selling Treasuries with a whispered warning for Washington to get its budget more in balance or they are walking away

Printfaster's picture

You have it backwards.

Bad cop = new GE contracts transfer GE IP to China to crush Boeing, and quoting John Chambers of Cisco, kinda:  "GE is now a Chinese company"

Good cop = China tells Bernanke to get the US house in order, or forfeit bail money


Mr Lennon Hendrix's picture

Paul could ask, Geithner would lie. 

Chaos theory floatin' like a butterfly and stinging like a bee!

alexwest's picture

stop print that kind of junk...

#movice trader putting in a sell order for $6 billion instead #of $6 million. The result is presented below.

what a junk.. did he press 6,000,000,000 instead of 6,000,000,000 or 6b instead 6m...

what a bunch of BS.. anybody of you, who wrote this junk, ever did C++/C# coding...?? checking input parametersis essential in any trading platform.. any 2d grade intern able to code that..

#2 this piece of junk shows any of you never work in 'Proprietary trading' firm .. just wanna be traders..

there's such thing a 'position limit' under any condition any novice trader would have been able to trade any kind of big volume..

and all this assume it was NOT automadated/robboted.,,
if this's case of program trading its 100% not possible.
all params are verified.

case is closed..


alter ego's picture

Sooner or later reality will arrive with revenge.

Look for those yields in the Treasury Bonds,

because as high as they go, interest rate will

face the same fate.

With all this uber leveraged economy only god

knows the dominoes effect that this will have.


As Bernanke said in the "60 minutes" interview

" We could raise interest rates in 15 minutes if we have to. So, there really is no problem with raising rates, tightening monetary policy, slowing the economy, reducing inflation, at the appropriate time. Now, that time is not now."


Bernie. I think inflation is what is going to control you.



The Axe's picture

And the equity markets care NOT...