Central Banks Drop An Anvil On Bond Shorts In Today's 3 Year Auction

Earlier today, there was once again a massive scarcity of 3 Year underlying paper, when as the SMRA charts below show, the bond was trading the most negative in repo it has been since September: at a -1.68% rate, everyone was rushing to short ahead of today's 3 Year auction. And with the latest tumble in rates, absolutely, everyone was convinced shorting today's 3 Year auction would be easy money. And then the central banks showed up, in the form of a whopping 52.7% in Indirect Bid takedown in the just concluded auction of $24 billion in 3 Years, which also was the highest indirect bid since December 2009.

Rental Armageddon Continues

At the core, a healthy housing market is one where owner-occupied buyers dominate the bulk of home sales. That is simply not the case. This is how you have well paid tech workers in San Francisco cramming into a 2-bedroom apartment like a clown car simply to get by. One thing that is certain from the overall trend is that larger investors are pulling back from the market dramatically.

Iran Responds To US Naval Escalation, Sends Warship Escort For Yemen Aid Vessel

The Iranian Navy is escorting Yemen-bound ships which Tehran says are carrying humanitarian aid for those caught in the crossfire between the Houthis and the Saudis. Given 'coalition' suspicions surrounding the possibility that Iran is arming militiamen, expect the US to be very interested in inspecting the aid vessels, setting the stage for a possible "accident" off the war-torn country's coast.

Greece Effectively Defaults To IMF Using SDR Reserves To "Repay" Fund; 1 Month Countdown Begins

Greece tapped emergency reserves in its holding account at the IMF in order to make a 750 million euro payment to the Fund on Monday meaning that, as predicted, the IMF is now paying itself. Athens has one month to replenish the account. Meanwhile, the Fund has indicated it wants no part of another Greek bailout. And just to confirm how terminal the situation for Greece is, MarketNews just reported that Greece now has a paltry €90 million in cash reserves left. The end of the world's most drawn out tragicomedy is finally nigh.

Is This Why Greek ATMs Are Empty?

Police have launched a manhunt for a 45-year-old man from Crete who is suspected of robbing 540,000 euros from the security firm at which he worked.

 

Infinity And The Bond Market Wormhole

Central banks ease, cajole, fluff up their feathers and push markets to where they don’t belong. Markets try to reprice themselves closer to normalcy (sanity). Central banks see their main equity index fall and panic. Central bank pushes more chips in and everyone has to cover. Central banks declare victory. Smart investor sells. It is so utterly appropriate that in the definition of infinite loop on Wiki it is pointed out that a synonym is “unproductive loop."

Bund Plunge-Protection-Team To The Rescue (Again)

If there is one thing more faith-in-central-planning-destroying than a drop in equity prices, it is a collapse in bond prices. Last week, when Bunds (and Treasuries) collapsed (with 10Y Bund yields spiking up to 75bps), there was a sudden appearance of a deep-pocketed buyer of last resort that rescued bond yields lower (and squeezed stock prices higher). Today, after overnight carnage, Bunds (and Treasuries) are once again mysteriously aggressively bid into the US open...

Markets In Turmoil - When Carry Unwinds

When risk-free assets, with de minimus regulatory capital requirements move like penny stocks, firms are forced to do something about economic risk capital - either derisk (sell assets), or increase capital (delever carry). The ongoing carnage in the world's bond market is creating just such a self-fulfilling problem for risk-assets everywhere (despite simpleton hopes that bond-selling means stock-buying - it doesn't as the marginal buyer is all repo/carry funded and not 'real' cash being rotated). Everywhere one looks, financial markets are turmoiling...

'The Crash" Will Not Be Caused By An Event...

When people think about crashes, they tend to think about an eventas if some massive, grotesque, red, scaly, fire-breathing, razor-toothed catalyst should be obvious beforehand. But we know from history that that’s not the way it works...