US Prices First Sub-3% 10 Year Bond Since November

Tyler Durden's picture

Today's 10 Year bond (CUSIP: QN3) priced at a solid 2.967%, just wide of the when issued 2.961%, the lowest high yield since November's 2.636% when QE2 was starting (in the form of POMOs, QE2 had long been priced in). The Bid To Cover confirmed the strength of the auction coming at 3.23, a jump from May's 3.00, and higher than the LTM average of 3.10. Indirect Bidders for the first time in 3 months surpassed 50%, taking down 50.6%, with Dealers allotted 41% and the remaining 8.3% going to Directs. Look for QN3 OTR to dominate POMOs over the next 2 weeks. Since there will likely be at most two more 10-year focused buybacks, Dealers will be able to promptly flip this bond to the Fed. As for next month, when the US is on the verge of a full blown default, it is unclear what happens.

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GeneMarchbanks's picture

Stealth QE that's what happens. Default is un thinkable. Maybe it's already started.

Missiondweller's picture

Stealth QE?

Please explain further.

GeneMarchbanks's picture

Pay attention around 1:54. Again, this, if done would be "transitory" but still...


NotApplicable's picture

Meanwhile they will use the debt ceiling battle in an effort to denigrate the Tea Party reps, setting the stage for the next election.

collegepunk's picture

nah, I don't think stealth will start right away. maybe in 6 months from now.

SheepDog-One's picture

Default may be unthinkable, but soon it will also be undeniable. 

GeneMarchbanks's picture

That doesn't seem all that far fetched. I want to see what Tyler thinks of this. So the vid of John Brynjolfsson being asked what if the Fed raises capital requirements, which means they(the banks) would have to issue shares then use the money to buy treasuries. So what would be the effects/affects of this assuming the banks could raise money by simply issuing more shares? You could really call it an extension of QE?

RobotTrader's picture

Wow, 325% oversubscribed.

The thirst for paper has never been greater.

Uncle Gorilla must be high fiving, realizing that trillions upon trillions of ever expanding deficits can be financed with ease.

Internet Tough Guy's picture

Yes, this is an example of a free market and real demand. lulz. Silly Momo.

Urban Redneck's picture

It's Meaningless- the thirst for free paper which can be flipped back for a guaranteed profit in a couple weeks is a measure of nothing but greed, and the stupidity of those willing to compete with bidders who have the guaranteed profit on the trade, regardless of pricing/rate.

SheepDog-One's picture

A lot can happen in a couple weeks to those who are sure theyre all profitable.

HelluvaEngineer's picture

Ohnoes.  Macke put down the straw for a minute and realized the Fed (and momo lovers like you) are fux0red.  A sign the party is over?

SheepDog-One's picture

Suddenly MomoFader no longer loves retail names and banking stocks, flipped right into a bond dork. Wow thats new!

Pancho Villa's picture

With the debt ceiling reached, the Treasury is just recycling existing debt. So the amount of debt for sale is less than it was before the ceiling was reached.

When the debt ceiling is raised, the Treasury will need to issue a lot of new debt in order to refill the various retirement funds that it is not funding at the moment. So there should be a surge in Treasury sales later this year. I wonder how long this refunding will require. If the period is short enough, the interest rate jump might be tradeable.

camaro68ss's picture

AMERICA, FUCK YA, doing whatever america can do, AMERICA, FUCK YA!

topcallingtroll's picture


We always win somehow!

We must be god's true chosen people.

How else to explain it? Only america gets a free lunch.

etrader's picture

"Financial repression includes directed lending to government by captive domestic audiences(such as pension funds), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between government and banks."

From: The Liquidation of Government Debt
Carmen M. Reinhart and M. Belen Sbrancia
NBER Working Paper No. 16893
March 2011
JEL No. E31,E4,E6,F3,F4,H6,N10

topcallingtroll's picture

social security...captive forced lending

regulation of cross border capital and labor movements...check

interest rate caps...thanks for nothing Bernanke.

cozy government and banks....

Well I guess the USA is four for four.

slow_roast's picture

Market is hot; when DEFLATION is ON Treasuries are a great investment!  Drink up bitchez!

RobotTrader's picture

All I can say is that every G-8 central banker will be adopting the Fed model of financing deficits and controlling inflation.

It has been a miracle, financing trillions every year at 3% or less, and inflation stamped out within 30 days by simply uttering some hawkish words, announcing margin hikes, and selling stocks down to get people out of "Things" and back into "Paper".

plocequ1's picture

All in a days work for those interns and their Bloomberg machines

topcallingtroll's picture

We are the least ugly girl in the beauty contest.

No one else has the world's respect and confidence to jawbone markets but the usa.

Admit it, usa haters.

plocequ1's picture

I have nothing to say. Im just happy to be here today... Thurman Munson

topcallingtroll's picture

dammit...give me a break.  I'm doing the best I can

Saxxon's picture

Yes Troll but that's what they call a wasting asset.  The parasites that have hijacked the U.S. are burning our good will, fast.

SheepDog-One's picture

'Its been a miracle'...well as long as you can ignore the fact that its a proven total failure....YEA I guess you can call it a miracle!

SheepDog-One's picture

MomoFader jumps from retail and bank stocks into a dorky bond geek? Gee, what will it be tomorrow?

Devore's picture

Yes, because every G-8 central banker has access to a reserve currency printing press.

topcallingtroll's picture

What a stealth bull market this has been!

Does anyone have the courage to ride the ten year up to a 2.1 percent yield? A 28 percent return in two years? Did i calculate that right?

SheepDog-One's picture

But its only about the flip-back to Sack in 2 weeks.

Amish Hacker's picture

Got  an infinite supply of dodgy bonds to sell, priced in a bogus currency? No problem, crush the euro and trash the equity markets, then get out of the way of the stampede into USTs.

topcallingtroll's picture

The europeans need no help crushing confidence and projecting an image of amateurish unstable monetary policy.

Hedgetard55's picture

TBTF's getting nicked today.

Cdad's picture

As for next month, when the US is on the verge of a full blown default, it is unclear what happens.

Indeed, some things that will be happening then are unclear now, but others are very clear.  I assure you, the BlowHorn [CNBC] will launch an all out information campaign centered on the new Lulu Lemon line of leotards for self-absorbed modern American vanity queens, while counting the number of days left in the Christmas shopping season and announcing upside guidance for sales of lace trimmed braziers.  It is also entirely possible that, by then, folks will figure out that burritos are not "health food."

Also, criminal syndicate Wall Street bankers will be liquidating all things not nailed down, trading well outside of the bid/ask spread via magic computers in an exercise designed to increase market integrity and confidence, while simultaneously grabbing every creation unit that pops out of the VXX creation units machine, claiming that a VIX of 35 indicates "relative" and "historical" calm [because it is not at 70 via trading suppression schemes], a conversation that will be lead by P. Najarian of the Nanosecond Money crew who will be telling folks not to miss the incredible "buying opportunity."

During this time, the average number of resumes circulated by Average Joe will reach a number not seen since the inception of statistical tracking, this while the value of his home sags as quickly as the price per share of criminal syndicate zombie banks, which will be concurent with criminal syndicate Wall Street bankers annoucnements of positive trends in their "channel checks."

And in the end, the bond market will likely implode.

So...while the future is certainly foggy at this moment in time, some things will be very predictable.  I just hope that Mary Shapiro of the SEC will have wrapped up her year long meetings with the likes of J. Dimon and L. Blankfien by then, just in time to police the market so that bad things don't happen.

You know, other than that....I agree.

SheepDog-One's picture

Hey I just listen to MomoFader, who today dumped his assless jeans and lace bra and banking stocks and is suddenly a dorky bond geek!

Cdad's picture

Funny...Robo NEVER responds to me when I engage him.  It is interesting that Robo is now just a bond guy.

Anyway, any minute now I'm sure the folks over at the BlowHorn [CNBC] are going to warn viewers that all of the inflows are going straight into the fixed income market...because they always mention when money is heading out of fixed income so as to alert viewers that fund flows into stocks is at hand.  Any minute now the BlowHorn is going to affirm Robo so that folks don't get caught in the Ponzi equity market...because they care about the people.  Especially Cramer.  He is the protector of the people and he would never direct them to buy pumped up and soon to be a lot cheaper stocks when the signal about where money is now flowing is clear.  The people need the BlowHorn to be helpful, which I'm sure it will be.  I'm sure the BlowHorn is going to warn people any minute now.  Holding my breath...

Oh, and I'm sure COMCAST has its action plan ready...its plan to finally commence "Operation Integrity Restoration" by finally allowing its employees to act like journalists and not like marionettes whose strings are held by criminal syndicate Wall Street bankers.

Robo...a bond geek.  That is a very odd thing, brother Dog.  But it is a very good thing for Robo that he is no longer in the assless jeans trade...because that trade is VERY OVER.




SokPOTUS's picture

"As for next month, when the US is on the verge of a full blown default, it is *nu*clear what happens."


  - There...fixed it for ya...

kito's picture

what happens? nothing. bonds continue to maintain strength. 

kito's picture

poor junkers, they just cant bear the thought of a drama-less summer.

topcallingtroll's picture

There is plenty of drama in europe if one finds the united states too boring!

SheepDog-One's picture

Well until next month, when the free crack party runs dry. Then what?

Bam_Man's picture

Hey Mr. Gross, how's that short US Treasuries trade working out?

ZeroPower's picture

Haha. Remember, its only synthetic, so according to him its not a real short. Might as well be considered a long, in which case, he's UP!

Cdad's picture


With that kind of intellectual prowess and counterintuitive thinking, you should immediately apply for a job with the criminal syndicate Wall Street banking industry.  I hear they need new leadership.

Boston's picture

I just sold some today (will buy back in, on a pullback) to........Bill Gross.