10 Year Bond Prices At 2.076%, Highest Yield Since October

Tyler Durden's picture


In February, the US spent a third of a trillion to fund various government programs. Since only a fraction of this money was funded with tax revenues, the balance has to come from somewhere else. Like today's 10 year $21 billion Bond auction. In the aftermath of yesterday's weak 3 year, today's bond also priced at the highest yield since October, printing at 2.076%, just inside of the When Issued 2.08%, and a far cry from January's 1.90% as the Fed is expected to use the word inflation in just under 60 minutes. The Bid To Cover was 3.24, compared to the 3.12 TTM average. The breakdown of buyers was virtually unchanged from February's auction, and saw 42% taken down by Dealers, 38.6% go to Indirect Bidders, and Directs taking down 19.4%, or the highest since August. Once this week's auctions are concluded, total US debt will be $15.6 trillion as the ramp into October's (at the latest) debt ceiling fight, which promises to be the highlight of this election season, begins in earnest. Any minute now, the CBO will also release its revised grading of the President's budget, which will see the 2012 deficit forecast increase from $1.08 trillion to $1.2 trillion.

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Tue, 03/13/2012 - 13:25 | 2250887 GeneMarchbanks
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Tue, 03/13/2012 - 13:34 | 2250934 chet
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Fletch:  "They said he had a deflation, an inflation... some kind of 'flation'."

Tue, 03/13/2012 - 13:39 | 2250959 AbruptlyKawaii
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bond suction.....fixed

Tue, 03/13/2012 - 13:57 | 2251027 TruthInSunshine
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Tue, 03/13/2012 - 13:26 | 2250888 Cognitive Dissonance
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As long as they can (make believe they can) sell the paper the Ponzi rolls on.

Tue, 03/13/2012 - 13:28 | 2250896 HarryM
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And it is R.O.L.L.I.N.G.......full speed ahead -  ALL Aboard!!!

Tue, 03/13/2012 - 14:23 | 2251097 earleflorida
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"Locomotive Breath [of the market?] -Jethro Tull  http://www.youtube.com/watch?v=SgfHz792Kqs

Tue, 03/13/2012 - 13:26 | 2250890 mayhem_korner
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How much headroom does Timmay have left in Fed Employee pensions to stave off the debt ceiling fight?

Tue, 03/13/2012 - 13:38 | 2250913 TruthInSunshine
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Paging Dr. Ben Bernanke. Paging Dr. Ben Bernanke. You're needed in the IOUSA Debt/Deficit Monetization Emergency Room with your Buzz Lightyear Printer & QE jackhammer. Stat.


To infinity...and beyond!
Tue, 03/13/2012 - 13:26 | 2250891 battle axe
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Treasury Bubble? You bet there is, and it is going to pop huge.

Tue, 03/13/2012 - 13:27 | 2250895 SheepDog-One
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"inflation'? Bah, Bernank will bitchslap that down in under 15 nanoseconds. 

Who cares anyway? We only got about 10 more trading days till markets smash thru all-time bubble top highs! Bust out the Dom and cracked iced lobster.

Tue, 03/13/2012 - 13:31 | 2250911 DavidC
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I'm prepared to believe that is Bernanke's goal...


Tue, 03/13/2012 - 13:35 | 2250940 SheepDog-One
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And then you have to ask 'Ok, then what'? They can pump fairly easily, but they can never sell it. Its a runaway locomotive. 

Tue, 03/13/2012 - 13:56 | 2251024 Vince Clortho
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There is no incentive to sell when you can print money.  The "market" is a side issue, the only visible indicator to the state of the economy to the masses.  They will keep it moving ahead to keep people at home in front of their TVs.

Tue, 03/13/2012 - 14:07 | 2251055 SheepDog-One
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Ok, so they have all the bankrupt people watching TV supposedly, then what?

Tue, 03/13/2012 - 14:17 | 2251099 Vince Clortho
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That is the question.

So far, the only sign of life I have seen in the US is the OWS movement.

Tue, 03/13/2012 - 13:28 | 2250899 Dr. Engali
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I continue to be amazed that people will buy paper that will give them a negative yeild when you factor in inflation.

Tue, 03/13/2012 - 13:30 | 2250905 battle axe
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Flight to safety...Until the Bubble goes BOOM.

Tue, 03/13/2012 - 13:32 | 2250914 Al Huxley
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If you like that, wait until they start buying paper with negative nominal yield.  That's probably the gov'ts long-term plan - balance the budget with the profits earned by getting people to pay for the privilege of owning treasuries.

Tue, 03/13/2012 - 13:35 | 2250941 Dr. Engali
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They have already recommended that treasury start to implement that plan. Just think debt that pays itself off. I'd like some of that.

Tue, 03/13/2012 - 13:33 | 2250922 DavidC
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It didn't stop the European banks parking trash at the ECB for negative yields either...


Tue, 03/13/2012 - 13:35 | 2250935 GeneMarchbanks
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If by ''people'' you mean slush fund managers, China's geo-strategic 'buyers' and just plain old-fashioned imbeciles, that should take some amazement away.

Tue, 03/13/2012 - 13:29 | 2250900 Tsar Pointless
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Look at the S&P go bitchez! Above and beyond the pivotal 1381 threshold I've seen some prognosticators point to as *the* coming top.

There's about a 1,000% chance we'll see the S&P climb toward the 1500-mark in the next few months. I'm seeing 1444 as an easy-to-get target.

Hey - it is what it is. Brent oil is going to $144 at the very least before TSHTF and we all fall down.

Chairman Ben may or may not announce QEwhatever this afternoon, but the mere idea that he will do so...sometime...maybe next month...perhaps...will keep the bots in an equity-buying frenzy for the foreseeable future.

Tue, 03/13/2012 - 13:33 | 2250923 SheepDog-One
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In the coming months ahead? Nah at this pace, only a few more days till we bash thru previous all-time record insane market bubble tops. 

Tue, 03/13/2012 - 13:34 | 2250932 scatterbrains
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Someone forgot to pass the bong to Copper....


Tue, 03/13/2012 - 13:54 | 2251017 Al Huxley
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That's because you don't need copper to issue new debt - it's obsolete, like buggy whips.

Tue, 03/13/2012 - 14:09 | 2251071 youngman
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You know for all the people saying that China is going into a recession..or is in one...and they are the biggest buyer of copper....they increased their purchases over 7% last month......I think they have this commodities thing figured out....throw out a bunch of bad news..drop the prices..then buy the hell out of it.....and they have an army of geeks on computers that can trash a market ...

Tue, 03/13/2012 - 14:05 | 2251035 Vince Clortho
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TSHTF point ... where is it?

Housing Bust? nope

Middle Class Disappears? nope

US becoming a non-producing min wage country? nope

TBTF Bailouts? nope

Greek Default? nope

Runaway Printing? nope

edit: add a few more:

Constitution tossed in a ditch? nope

Habeas Corpus thrown out? nope

Freedom of Speech thrown out? nope 

So what is TSHTF trigger?

Tue, 03/13/2012 - 14:07 | 2251056 Tsar Pointless
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Winter. Of the nuclear kind, of course.

Tue, 03/13/2012 - 14:08 | 2251064 SheepDog-One
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I dont know, probably something no one saw coming no doubt....like an alien invasion.

Tue, 03/13/2012 - 14:13 | 2251086 eddiebe
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All of the above plus scarcity of gas and food.

Tue, 03/13/2012 - 13:30 | 2250907 mayhem_korner
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Today's Fed fun stat: the US gubmint's $223B deficit in Feb amounted to $88,600 of deficit spending per second.

Tue, 03/13/2012 - 13:31 | 2250910 aztec two step
aztec two step's picture

There is huge support for the 10 year at 2.08 and at 3.24 percent on the 10 year note. Violation of those levels will induce a fast and furious selll off

Tue, 03/13/2012 - 13:34 | 2250928 SheepDog-One
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Sell off? I dont think they can do it...who would the buyers be when the only present buyer now the FED has to sell? 

Tue, 03/13/2012 - 14:01 | 2251037 Vince Clortho
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Won't happen.

Tue, 03/13/2012 - 13:31 | 2250912 All Rise
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Is that chart in 3D?

Tue, 03/13/2012 - 13:35 | 2250936 eddiebe
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Oh wow, 2%, quick sell all your gold and buy bonds!!!

Tue, 03/13/2012 - 13:35 | 2250939 Al Huxley
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OK, so what everybody needs to do is just borrow money from the bank, and buy Apple stock on margin.  This is a win for everybody - banks are lending, profits from AAPL keep the general population insulated from the effects of $10/gallon gas, AAPL keeps going up because of all the buying pressure, what could possibly go wrong?

Tue, 03/13/2012 - 13:37 | 2250950 LawsofPhysics
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The question is, how much higher would the rate have to go before servicing the U.S. debt becomes unsustainable?

Tue, 03/13/2012 - 13:43 | 2250977 mayhem_korner
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That depend on your time horizon.  Even if the coupon rate was zero, and only the principle had to be repaid, the US would default eventually.  It's not like the debt number is getting smaller.

All the same, it'd certainly be a mushroom cloud to behold if yields went up 400 bp or so.  :D

Tue, 03/13/2012 - 13:56 | 2251023 Al Huxley
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It NEVER becomes unstustainable, because if rates ever do go up, they just print more money.  I've finally figured out how this fucking system works.

Tue, 03/13/2012 - 13:59 | 2251031 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Inflation is tradition....or transitory...or something.

Tue, 03/13/2012 - 14:03 | 2251042 Yen Cross
Yen Cross's picture

 "Oh, what a web we weave, when we practice to deceive!"

Tue, 03/13/2012 - 14:55 | 2251277 Roland99
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because I restarted my failed attempt (last time was back in, you guessed it, Oct 2011) to refi my mortgage.




Tue, 03/13/2012 - 15:46 | 2251522 Pool Shark
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"10 Year Bond Prices At 2.076%"

Update:  Make that 2.12%



Wed, 03/14/2012 - 02:36 | 2253153 cnhedge
cnhedge's picture

yield is going up, low yield environment is gone.




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