Treasury Places $35 Billion in 5 Year Notes; US Now $64 Billion Away ($35 Billion Tomorrow) From Debt Ceiling Breach

Tyler Durden's picture

Like clockwork, the Treasury placed $35 billion in 5 year bonds with the usual suspects. While the high yield was the highest since May 2010, at 2.26% there was nothing particularly notable about this auction, which saw a 2.26 Bid To Cover, continuing the trend of a gradual trendline ever higher, with Direct bidders taking down 11.2%, the highest since November, Indirects jumping to 42.4% from 34.2% last month which was the lowest in two years, and Primary Dealers eating up the balance. The bond came with a 1.5 bps tail to the When Issued which had been hugging 2.246%. What is far more eventful is that with yesterday's $35 billion 2 Year auction, today's $35 billion in 5 Years, and soon, tomorrow $29 billion in 7 Years, total US debt subject to limit will be $14.258 trillion: just one auction away, or $35 billion, from breaching the debt ceiling. Also, the total debt, not just that subject to the ceiling, could pass the legal threshold as early as tomorrow (pro forma for settlement).

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mr Lennon Hendrix's picture

I don't know.

He did NOT say that, did he?????  BAHAHAHAHAHA!

I thought he said,

I'm not telling...and you are no longer invited to my birthday party.  PPPtthhbbttt!!!

Maybe he said both.  What a loser.  He has the maturity of a five year old....or is that five year bond?  Luckily, he is a Doctor, so he totally knows what he is doing.  Totally.

RunningMan's picture

Debt, schmebt. Fire up the auxiliary power at Indian Point and get the presses rolling at full throttle.

Harlequin001's picture

onward and upward as they say...

goldfish1's picture

Rules and debt ceilings do not apply.

divide_by_zero's picture

Like I said about the Fed FOIA ruling, exactly who will enforce it? Or for that matter Obamacare being ruled unconstitutional, rule of law no longer in effect.

Racer's picture

Well done evil ones, the latest debt target has nearly been achieved

dbTX's picture

they must be blowing through cash like crap through a goose

Larry Darrell's picture

Spending for FY 2011

~$3.3 trillion (or $3,300,000,000,000)

= $3.3 E+12 / 365 --> $9,041,195,890 per day

= $9,041,195,890 / 24 --> $376,712,329 per hour

= $376,712,329 / 60 --> $6,278,539 per minute

= $6,278,539 / 60 --> $104,642 per second


That's right.  Your government spends way more than the average citizens' YEARLY income EVERY SECOND OF EVERY DAY

But, the US economy is NOT, I repeat NOT a ponzi scheme (/s)

the not so mighty maximiza's picture

they will raise the debt ceiling in the middle of the night when no one is looking.

Harlequin001's picture

all the newsworthiness of a credit card limit increase...

when you think about it.

Zina's picture

The problem is: tens of Tea Party-backed Republican representatives elected in last November are afraid of voting in favor of the debt ceiling raising, and have to explain that vote to their voters...

So, there is a real danger the debt celing raising don't pass the vote. And Obama will not put that into vote until he is sure that will pass. In the meantime, there is a real risk the debt is reached, and all hell breaks loose... "Black swan", some will say...

the not so mighty maximiza's picture

It will be interesting if the tea partiers actually do what they say.

StychoKiller's picture

Time to count the number of spines in Congress...

RobotTrader's picture

Since when has the debt ceiling mattered?

They will just raise it.

Or print more paper anyway, monetize something else off-balance sheet, or whatever.

Really, it is a non-event.

Long-John-Silver's picture


As long as the Bernak can swap counterfeit paper between the FED and Treasury and people continue to take FRN's as real money, the debt means nothing.

Mr Lennon Hendrix's picture

Since when does anything matter in finance?


Ethics Gradient's picture


They're not going to stop paying coupons.

jkruffin's picture

Must be why they are pumping stocks so hard today, because when the ceiling is breached, its gonna crash and yields are going way up.

Dr. No's picture

and yields are going way up


Not sure.  Supply and demand right?  IF the treasury actually stopped issuing debt, supply would dry up.  With the FED continuing POMO, demand is still heavy.  Prices would go up.  Yields down.  Am I wrong on this? There may be some posturing like issue more short term rather than long term in order to stay under the limit.  None the less, will be interesting. 

EDIT:  But then the treasury would have to default (since it is a ponzi), resulting in HUGE deflationary forces.   Yields?  not sure since a default is a default.  my head just exploded.

Cdad's picture

the total debt, not just that subject to the ceiling, could pass the legal threshold as early as tomorrow (pro forma for settlement).

Now that would surprise people...right?  People would not be expecting that, would they?  With Bob Pisani screaming "teflon" and "the nothing matters rally", and even the supreme idiot over at the Ministry of Truth, Tyler Mathisen, figuring out that no one is selling....but one can see a sell off coming, right?  No one is bothered that the very last buyer of everything in the market is about to hit zero on his balance...and no one can see it coming.

And Apple languishing in the rear, and casual diners levitating on PixieDust lots changing hands [check the one day chart on EAT...literally...I don't think any lots are actually moving...but the price is oddly] one is really thinking to sell, right?

And you got your Iphone ready...right?

Greater Fool's picture

Yes, including a special e*Trade app featuring a cute little talking baby that projectile barfs every time I hit "sell."

Unfortunately, the only other setting for that app has Ken Griffin saying "Buy the Fucking Dip, You Fucking Idiot." And Ken Griffin is way creepier than that talking baby.

Cdad's picture

Understood Greater Fool,

You are putting yourself down for "complete surprise" then, and being straight up honest about it, which I appreciate.  Do I have that right?


SheepDog-One's picture

Everyone sees clearly the game is over, but for today, stocks love it and climb higher. Like a crackhead on the Golden Gate bridge.

Cdad's picture

And so Dog is also in camp "surprise."  Got it.

camaro68ss's picture

I LOL so loud everyone is looking at me in the office. Thats good stuff!

TruthInSunshine's picture

I'd love to see the government shut down.

The best thing that could happen to this country is for her citizens to realize that they'd be better off without the Faustian Pact many of them have bartered with the government, and that getting back to some semblance of limited government would ensure that there could once again be hope that their childrens' lives would be better than theirs.

traderjoe's picture

So true. But, I think the PTB have masterfully relied on the people's desire for short-term gain, over long-term prosperity.  

andybev01's picture

America: where instant gratification isn't fast enough.

sdmjake's picture

That is my great wish as well {but much to idealogical to work in reality}...but we can dream!

SheepDog-One's picture

Only going to see that after about 100 million or more americans are dead.

depression's picture

The budget deadline is April 8, word is the negotiations are not going well at all. A shutdown does look possible. The debt ceiling is gonna get hit right about that same time, first week or April. and then QE-2 ends in June... gas at $4 per gallon, could make for some interesting times this summer.

So I guess the market is pricing in that Congress will raise the debt ceiling by another $1Trillion or so before the end of next week, the new budget will pass before April 8, and QE-3 will come online in the late May time frame.

Fenlander's picture

forgive me, I'm a Brit so don't follow the US Congress closely.  Is it a legal requirement in the US for Congress to formally authorise a raise in the debt ceiling,  or is it something that can happen with the simple signature of some official?

Bastiat's picture

We really don't have any legal requirements for the executive branch anymore.

Long-John-Silver's picture

It's become an Oligarchy with a powerless and irrelevant congress.

Long-John-Silver's picture

Technically congress must authorise a new debt limit or the government shuts down. At this point the Republicans fear a shutdown as Democrats want a shut down so they can blame the Republicans for a Government shutdown. The Republicans will be forced to increase the debt limit so nothing changes. The US Dollar WILL crash at some point in this ignorant political game. I gave up long ago and convert all US Dollars to physical Gold and Silver. At some point Gold and Silver will be worth an infinite number of US Dollars because no one will trade any amount of them for anything including food, energy, Gold, and Silver.

Fenlander's picture

Thanks LJS.  Follow up:  is Congress actually doing anything about this?  Is there some emergency vote or even debate scheduled?  Per TD's forecast, what happens on Thursday when the limit is breached?

Long-John-Silver's picture

congress is irrelevant. They will be forced by Obama and his pawns to increase the debt limit. Obama will continue to spend the unlimited number of FRN's the Bernak can print on paper and digital ones and zeros. As long as food and energy is exempted from inflation calculations everything will remain the same.

TruthInSunshine's picture

It's called Kabuki Theater.

See, our political parties aren't really different, as they work for the same masters (not voters, either).

They'll raise the debt ceiling because there's no way for their masters to rape and pillage further if taxpayers can't be squeezed further.

Theoretically, if they didn't raise the debt ceiling, the government would have to start scaling back all non-essential government functions (in reality, this would be about 92.387% of them, but in real life, it's about 5% to 10%), so that they could match the existing debt ceiling.

But again, that's a theoretical exercise in Amerika.

TruthInSunshine's picture

Fenlander, Congress has 'the purse,' as they say, under our Constitution.

Yes, the House of Representative and Senate have to both vote to raise the debt ceiling in order to allow further spending to occur.

metastar's picture

Hmmmm. It seems to me that the unelected FED has the purse and thus must be ended.

TruthInSunshine's picture

Congress delegated its coinage authority, de facto, to The Federal Reserve, in 1913.


metastar's picture

Let me explain it real simple.

There is no constitution, no supreme law of the land.

In fact, there is no law period! There is simply force wielded by a brutal regime upon its citizens and the world to keep power for itself and big corporate interests.

America is dead.

plocequ1's picture

Who cares. Just buy stocks and let Dr. Bernanke perform his majestic work. There is no debt ceiling. Its all good.

ShankyS's picture

Bernanke says, "Just pull it. Just pull it."