Treasury Sells $21 Billion in Ten Year Bonds As Indirect Interest Drops

Tyler Durden's picture

The Treasury just sold $21 billion in a 10 Year reopening (9 year 10 months), at a high yield of 3.494%, just below last month's 3.499%. Overall the auction turned out weak pricing outside of the when issued, confirming that the butterfly-ES correlation (which is primarily driven by the 10 Year) is working. And just as the market dipped into the auction the natural response would be a pick up following the placement. The internals were weak: Primary Dealers were forced to take down more than half (51.7%) of the auction (with every intention to flip to the Fed in a week or so), the highest Primary Dealer takedown since February 2010. In return, Indirect Bidder interest slumped to 42.4%, the weakest showing since October of last year, and the balance, or 5.9% was filled by Directs. The low Bid To Cover completed the weak picture, coming at 3.13, the lowest since December, but in line with a one year average. More importantly, with this $21 billion and yesterday's $32 billion, US debt is now $53 billion higher than the unsettled total disclosed yesterday of $14.268, or $14.321. This is far above the debt limit. It also means that the debt actually subject to the limit is now $14.269 billion, or $25 billion below the ceiling.
And keep in mind there is another $13 billion in 30 Years to be
auctioned off tomorrow (granted offset by $19.2) billion in maturities.
Will the Treasury last through July without a debt ceiling increase at a
rate of issuing $125 billion in net debt per month? Not a chance in

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camaro68ss's picture

I need help, what does it all mean.

The bernake is going to have to shift the print press into warp drive

Mr Lennon Hendrix's picture

The indirect bidders are foreign Central Banks. The Direct is the Fed. The Private Dealers are the proxy banks of the US that have access to the discount window. In nominal terms, the indirect bidders have maintained their appetite for treasuries, but in real terms they have been buying less and less. This because the bonds are worth less in real dollar terms and they are making back less dollars upon maturity. The Private dealers are filling in where the indirects leave off, but flip them to the Direct only weeks later. The Fed has become the largest defacto bond holder, but they do not mind, as their POMO desk monetizes the bonds accordingly.

slewie the pi-rat's picture

don't mean nuthin, really, camaro68ss.  same shit, diff day. 

the Treasury needs to borrow or it's checks will bounce.  the FED will need to digit-print this money for the Primary Dealers (banksters) who bought most of these paper promises, here at this week's "auction" by next week, as tyler sez, so the game can continue without the "buyers" of this paper from the Treasury turning tail and just running away from this paper hoooey.  this is called QE2. 

it's a con game run by banksters and their wholly-owned pols & nations.  like ours!  when this whole crock of utter bullshit augers in, fear not!  the IMF is waiting in the wings to make sure we are enslaved by every penny of this diabolical fukin debt as they take over control of the "banking problems" and usher in the New World Order with new colored pieces of fiat paper "money" and computer digits. 

of course, the world will be much scarier, then, and all people everywhere will hafta be watched and controlled very closely, for their own security, of course, and to guarantee future slave-generated cash flows to the lucky criminals, financial elites, rothschild cabal members and "secret" intel agencies, especially mossad, who "own" all this "debt" and control their puppet "nations".

pretty simple, huh?


Triggernometry's picture

Same shit, different number.

I hope you don't mind me correcting your statement over the limit as t approaches infinity.

the mad hatter's picture

Google fails to explain to me what an Indirect Bidder is. Is it a way of gauging interest in purchasing US debt?

Porkbellytrader's picture

An indirect bid, or IB, which is a bid of significant size that does not go through the primary dealer community. Treasury traders view this bid as demand from central banks, which accumulate dollars during periods of intervention in the foreign-exchange markets.

Read more:

Quintus's picture

The definition has been deliberately muddied, but basically this is the category that includes foreign buyers like China, Saudi etc.  i.e. 'Real' buyers as opposed to the Fed-backed Primary Dealers, 'Household' sector and other fronts that The Bernank uses to make it look like there is demand for the crap that the Treasury is issuing.

slaughterer's picture

Let's just knock the "ern" out of the The Bernank.  So we can see him how he is:

The B...ank.

FOC 1183's picture

these should season at least 2 weeks before acquired by bensatan

SheepDog-One's picture

Ah yes, finely aged monetized debt. Heady aroma.

Mae Kadoodie's picture

seasoned like a roadkill carcas grilled with a little A1 and a glass of chardonney.

FOC 1183's picture

and sandwiched between two iPads

Cole Younger's picture

The treasury is not going to stop borrowing regardless if a debt cieling is reached or not. They will not stop borrowing even if cogress does not approve a new cieling. This government does what it wants, when it wants, and congress nor the courts will, or can control it.

outamyeffinway's picture

They'll just ignore the debt ceiling. Why should they  bother with protocol at this point? Who will enforce the law? You couldn't stop the flood of prosecutions.

This is the end my friends.

oklaboy's picture

They are intentionally going to bust the cap, because like Bammy, who cares about rules? Keep the ponzi alive!

plocequ1's picture

So all that this means is Captain Ben prints more money, Buys stocks, Then sends the Bill to us " Gringos "

Cdad's picture

As usual, the BlowHorn [CNBC] seems to have lost its voice on the treasuries issue.  They luv it luv it luv it when funds are flowing out of debt so that they can make the case that funds are flowing in to equities.  Yet when the money is chasing a rising T Bill price, they just are not there to tell the story.

So anyway...I thought I'd remind folk since the BlowHorn tosses its credibility on the bonfire of this Ponzi equity rally at every single turn.  Oh, Becky...what has become of you?

Money is chasing the safety [lol] of T bills...and equities are in liquidation mode.  Should be an ugly close...


bulbar's picture

Who cares any more?  They will just keep raising the ceiling.  $50 trillion ceiling by 2015.

Holodomor2012's picture

Are we really going to make it that far? 

Upswaller's picture

So when the primary dealers flip to the Fed 7-10 days later, is that QE2 $ being spent?  If so, it begs the question what happens when it "ends."


Still learning here, thanks for any input.

clones2's picture

I think you start to get a small liquidation in equities - which could get a bit out of hand.  The only real volatility in this market has been to the downside.  No major upside volume whatsoever.

These markets seem to get dangerous when they start to turn lower under their 50 DMA's.

AR15AU's picture

What if the Federal Reserve just prints money and gives it to the Treausury outright, as a gift...??  That way, its not added as debt.  You guys didn't think of that...!

FlyPaper's picture

That's pretty much how I view it.  Treasury spends; but by law has to issue debt for that spending.  When the Fed buys the "note" - the "Debt" is actually a ledger entry; hence I look at the Fed's treasury debt as an indication of monetization (money out of thin air) vs. debt that will be paid back.

Any other ZH'ers want to comment?

Twindrives's picture

How about we merge the Fed and the Treasury and Obama can be the Bernanks' shoe shine boy?   Timmy Geithner can lick his shoes while Barry puts a shine on them.

FlyPaper's picture

How about this: Tim G. is not a fool, so has been issuing debt so he can fill the Treasuries' checkbook with funds.  That way if the government shut down, they still have plenty of cash to keep things going for an extended period of time.

Further, it "tweaks" the issue over raising the debt ceiling and forces the issue sooner.  Of course the Wall St. guys have expressed bond armageddon if the ceiling is not raised.  Seems like armagedden is going to come and the exercise is which party to "blame" it on.

Conclusion: Not surprised.  Geithner is doing what I'd do.  He'd get his ass kicked if the Treasury ran out of money.

max2205's picture

If the Tea Party folds on the cap look for a second generation party.

THE MAD HAT TEA PARTY and it won't be pretty.

dootyfree's picture

What are you talking about, bid to cover was over 3 to 1....... more proof that the solvency question is bs, and the deficit concern is even more bs.  If debt/solvency was such a concern, then why do people still continuely buy our debt.  Here's a hint:  the US could only default if congress allowed it to.....

Quit listening to people who try to scare you for political reasons....and learn for yourself how the monetary system works.