10 Year Prices At New Record Low Yield

Tyler Durden's picture

With the Fed buying up billions of 10 year paper 2 hours ago as we discussed earlier, it was only logical that the $4.8 billion gap created by the Fed's desire to monetize would be promptly closed. Sure enough, the $21 billion 10 Year reopening just priced at a new all time record yield of 1.622%, but also priced well inside the When Issued which had been trading at 1.635%: an indication of major pent up demand heading into the auction. The Bid To Cover rose from April's 2.90 to 3.06, but the most notable number was the drop in the Primary Dealer take down which only accounted for 37.2% of the auction, the lowest since December, while Indirects and Directs received 42.0% and 20.8%, the direct number being the highest since August 2011, and only the third highest in history. Pimco's fingerprints are all over this. And maybe China's as well: recall it is now a Direct bidder too, and can bypass the Primary Dealers. All in all, a scorcher of an auction. Then again, when considering the same-day round trip already observed, perhaps this is hardly too surprising.

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fuu's picture

Daily funding crisis over, off to the races?

veyron's picture

Today's funding crisis is over ... how about next week?

fuu's picture

Eat, drink, and be merry for tomorrow we die.

zaphod's picture

No, the Swiss have record low rates diving into the negative. Ben still has a long way to go with US treasury rates. I think -10% on a 50 year is his goal. That will solve all problems.

greyghost's picture

omg...i have never seen so many males of the species without balls as was just on display in the senate. one slow pitch softball after another from one senators after another. i don't wish to be cruel but has senator johnson had a stroke? either way how is this guy top billing on any commitee? the questions were so useless that i started to check out the latest and brightess grads in the background. talking to each other about how good their senator looks pitching long slow balls that the accused was hitting out of the park....god save america with these crooks watching over the crooks.

update: listening to charle the gas on fox in the other room...he feels the same as i do, completely clueless asking questions and getting answers from the boss.

slaughterer's picture

The women in my office thought that Jamie was sexy and in control.  They all want to fuck him tonight.  

Buckaroo Banzai's picture

You work with a bunch of whores.

fonzannoon's picture

Whenever I go to the batting range I walk past the softball cage. Who knew going in there gets office chicks to want to fk you.

eclectic syncretist's picture

Too bad Satan's work occupies all his time.

battle axe's picture

Flight to safety....Suckers.

junkyardjack's picture

Crisis? What Crisis?

Tsar Pointless's picture

Crisis? I don't see no crisis.

I see hockey and basketball and soccer and baseball and Amerikkkans with talent and bachelors and bachelorettes and dancing and rising stock markets and sunny skies.

There is no crisis. Only bread, circuses, and opportunities for the rich to get richer, by stealing the remaining wealth from us poor schleps. Oh, and they accomplish that goal by dividing us socially and conquering us politically.

The crisis is a made-for-teevee reality show.

Dumpster Fire's picture

It's a sad world when this shit is considered safe.

mayhem_korner's picture



The theory of relativity apparently applies to bonds as well.

HoofHearted's picture

Now, what would really work...Italy should start a daily gold auction. They would likely have a few (Eastern) buyers. And many non-Westerners would be willing to dump their euros or USD for the gold. Now that would be a real auction.

CrashisOptimistic's picture

It's not 100% safety as motivation. 

It's enormous capital gains since 2.58% in August.  It's obvious crushing deflation.  It's the only market big enough to park money in liquidly.

It's the same forces forcing London real estate up. 

There is nowhere else to go as deflation derived from oil scarcity crushes the world.

Solon the Destroyer's picture

It's a sad world when this shit is considered safe.

There is nothing safer right now than front-running the Fed. Risk-free profit.

RiverRoad's picture

Interesting times these days with China, especially their position now as a Direct bidder.  Even more interesting, the messing around they've apparently been doing with our telecommunications.  Big investigation going on in Washington right now; our navy coincidently headed to China seas.  A little military action would certainly get some well-needed inflation going....

the 300000000th percent's picture

Is it just me or does this happen every day now

skepticCarl's picture

Bless you, Bernanke!

(you gotta admit, that's original )

Flakmeister's picture

What was that Beach Boys song that obliquely referred to a circle jerk??

ArrestBobRubin's picture

Jim Willie has done it again, he called for exactly this to happen. 10 year yields at & sub-1.5%

Jim says this is a result of the chronic over-utilization of the Fed/ECB interest rates swaps in place to help support the euro!

Your other option is to believe the driver is really a "Flight to Safety" to UST's...

Choose wisely.

NotApplicable's picture

It's a "ZIRP, ZIRP, ZIRP, ZIRP World!"

Just wait until it's sub 1%. That's going to go over in the conventional wisdom world just about as well as the discovery of the reality of Stagflation in the 70's.

Watching the Swiss 30yr. go negative will be a real hoot too. As we all know: "All that money has to go somewhere."

Here's the Willie article for those interested.


Bay of Pigs's picture

Willie is a natural fit for ZH. Instead we get Biderman pumping FacePlant...


Dr. Engali's picture

So China gets a discount by bipassing the broker dealer and in return the get an even lower yield. Hmmm.. Doesn't seem like it worked out so good for them. Good for the old hat in hand uncle Sam.

fonzannoon's picture

So I guess the China dumping our treasuries argument kind of falls by the wayside. Put them in line in front of PIMCO and the typical US retail guy that is famously pulling money from equity funds and watch them all stand on the train tracks together.

NotApplicable's picture

Either China owns you, or PIMCO does. Warms the heart, eh?

As for China dumping, last I saw, their average maturity is getting shorter and shorter. So they don't even have to dump, but merely threaten not to roll, hence their new direct bidder status. All they gotta do is pickup the phone.

"Harow, Mr. Timmah, prease."

fonzannoon's picture

funny and relevant. Tremendous.

Solon the Destroyer's picture

As for China dumping, last I saw, their average maturity is getting shorter and shorter. So they don't even have to dump, but merely threaten not to roll, hence their new direct bidder status. All they gotta do is pickup the phone.

They can front run the Fed now too. Probably a quid pro quo for threatened dumping.

I suspect though that China's real plan is to slow-play their twin aces and prepare for an eventual migration into silver coin.  They can't do it all at once, but they can easily pull it off if they take it slow and careful.

They've been raising the pot as every card is played: encouraging their banks to make silver and gold available even to the nation's rural cadre, easing controls on silver imports and threatening embargoes and tariffs on exports, improving their silver mining capacity, and efficiencies.

And there's a whole lot of silver hiding in their heartland from their culture's historical relationship with the silver and silver coin. I think it's only a matter of time before they open their Mint to that metal.

That's a whole lot of cards, and the USA is matching China's pot raises while holding SFA. This hand will end with the Chinese all-in and the USA crushed if they call.

China, however, will be watching Mexico and India on this matter very closely. The early bird gets the worm.

Cursive's picture

If it is Pimco, Gross is going to have to be extra nimble.  I could see how this could be profitable if you buy the 10-yr. here and sell in the next 3 to 6 months.  But, is it worth the execution risk?  And who are you going to sell to in size? 

Village Smithy's picture

Maybe he's expecting them to go Swiss at some point in the next year or so.

NotApplicable's picture

Or he's part of the "informed advice" cabal.

bnbdnb's picture

In 2 years, the fed will own every bond in existence.

semperfi's picture

In 2 years, the fed will own every body in existence

NotApplicable's picture

All your debts are belong to us! Meanwhile, they won't owe a soul anything.

semperfi's picture

Where did The FED get the cash to buy the bonds?  Graham Summers, perhaps you might know? 

dcj98gst's picture

Haven't you seen?  Bernanke mows lawns in his spare time.  That is where the FED gets its cash.

youngman's picture

To me this is not a trade play...to much connected to a black swan event...everyone has their finger on their triggers...watching and listenig to everything...but it looks safe on someone balance sheet...to someone who does not know anything..for me GOLD vs a 10 year....i´ll take gold

CrashisOptimistic's picture

Go ahead.  When they tax your gold transactions at 60%, the second it threatens the system, you're screwed.

Bonds are the only place to make capital gains as grinding deflation drives the yield to -1.5%.  Yes, minus.  If you hold from 1.63% down to -1.5%, you make serious money.

neidermeyer's picture

If they try that gold will leave the US on private jets so fast they won't have time to file an IFR flightplan.

Amish Hacker's picture

"an indication of major pentup demand"

Oh, pleez

lolmao500's picture

Totally ridiculous. The US at this time is like the hooker on heroin with crabs and syphilis compared to the European whore with AIDS...

RobotTrader's picture



All the radio and TV news shows are talking about the "Debt Crisis" and the "Fiscal Cliff", yet the world is clamoring for U.S. Treasuries like never before.

35-year bull market, 99.9% of all Treasury purchases during the last 35 years are in a winning position.

And the bond market is at least 5x bigger than the stock market.

Infinite Fiat, spawned by Ben Bernanke, the "Master and Commander"

Love it, live it, learn it.


markar's picture

The world is clamoring for US Treasuries? Would that world be the Fed and the primary dealers--and JPMs $trillions in IRS?

Solon the Destroyer's picture

This is capital destruction at its finest.

The Fed has no idea that it is the engineer throwing ever more coal on the out-of-control deflationary train.

They think OMOs create inflation when in fact it does the exact opposite.  They are destroying the functional economy.  What business is going to take on new debt  and invest, with perpetually falling interest rates?  What company can compete with a greater debt burden than those taking on newly issued debt?  And what happens when those taking the newly issued debt find their debt burden greater than those taking it on in future months? This train is a regressive nightmare. I wonder how long it will take Bernanke to realize this mathematical fact?  There is a very good reason why taking the OMO track was made illegal (with heavy penalties) in the original 1913 Fed Act.

The bond speculators are in control of the train now, front-running the Fed's OMO engine like a cattle guard to make illegitimate risk-free arbitrage profits.  Interest rates can halve for a very long time.  But as they do (with a certain amount of time lag), they will drive up bankruptcies and unemployment and quell new investment till tax receipts fall too much and the sovereign burden becomes too great for the engine to pull the load. 

Then you will see the signal from the station: the bond vigilantes moving from the bond market to commodities. Gold will go into permanent backwardation, society will be reduced to poverty, barter and lawlessness, and it will be Game Over.

Solon the Destroyer's picture

A junk with no counter-argument?

Ben?  Is that you lurking in the tulies?