10 Year Prices At Record Low 2.14% As Direct Takedown Surges To All Time High 31.7%, Indirects Plunge

Tyler Durden's picture

There were many odd things about today's $24 billion 10 Year bond auction, which just closed at an all time low yield of 2.14% (down from 2.92% in July), the pricing being just one of them. That this was a very favorable result is a given judging by the yield just following the auction which has since tumbled to the lowest ever except for yesterday's dramatic collapse in yields. At this point, courtesy of the Fed's genocidal policy, it is very possible that the 10 year could drop below 2% shortly. What was probably just as interesting about the auction was the unprecedented surge in Direct Bidder take down which soared from 13.9% to a record high 31.7%, a number not seen since the last time the world was imploding or back in May 2009, when it hit the then high 25%. The reason why Direct had to step in? A massive collapse in the Indirect Bid, plunging from 42% to 35%, the lowest since February 2010. Either the Fed's proxy account finally came out of the closet or China is now very confused and telegraphing a plunge in Indirect Bidding even as it buys up ever more via its London accounts. Either way, the first 10 Year auction since the downgrade passed with stunning success: congratulations, cherry popped.

Directs -nuf said:

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Spitzer's picture

Imagine what gold will do when it starts seeing some bond money.

FunkyMonkeyBoy's picture

Not enough physical in the world, or will ever likely to be, to satisify that demand.

Quintus's picture

Well, I'd say that very much depends on the price.  At $1,000,000/toz there should be plenty of physical to meet demand.

If not, then maybe $1,000,000,000/toz would do it.

Sudden Debt's picture

I don't want to sound like a traitor...


Long-John-Silver's picture

$1,000 Burgers on the value menu.

Spitzer's picture

If treasury bonds could rally for 30 years then gold could rally for 300 years.

bbq on whitehouse lawn's picture

Some salt mines, maybe some rice patties. Really there is little you can buy during a debasement.  Everyone gets debased currency in return for product. So unless you get your product for less then the debasement, you will not make a profit.

Salt and rice are close, some land or property in Madagascar might be worth looking into.

But when all is said and done you would be hard pressed to match or beat gold now.

eddiebe's picture

It looks like finally gold stocks will have their time!

Sudden Debt's picture

10% will do to make gold go to 60K and silver to 4K.

But there's no place where they can buy all that gold and silver even at those prices to allocate 10% of those funds.

ZeroPower's picture

Apparently not low enough!

Based on the prices now effective yield (10yr) is ~2.09/2.10%. Simply crazy move in the 10yr, 30 as well.

Biggvs's picture

Yeah, 30yr down to 3.5%, wow. Feels like it was just 4%.

Shibumi2's picture

I think the whole bond issue is a fraud.


How about some transparency and list who is buying this so called "paper"

Dr. Engali's picture

Seems like there is something "odd" happening at a more rapid pace lately.

Sudden Debt's picture

just smoke....

Now the silver futures after Jan. 2012 are selling below spot... it used to be only the dec. 2012 who sold below spot and now it's like it's moving up....

must be a communication error.... and nobody is buying those either....


ihedgemyhedges's picture

TD said "congratulations, cherry popped."  Thanks, TD, for taking me back to my sophomore year of high school.................Only difference, I didn't tell her "congratulations"........................

Sudden Debt's picture

you did give her a 50 right?


ihedgemyhedges's picture

no, gave her an 8 1/2.....................

Dr. Engali's picture

What did you do? Give her 41/4 twice?

ihedgemyhedges's picture

No, only went halfway with a 17.........................

wombats's picture

Looks like QE3 dressed in drag.

slaughterer's picture

Yup, QE3 flag triggered on the 10-year auction today. 

Dapper Dan's picture

POTUS meets with the Chairsatan this afternoon.

They will lower the interest rate to near zero, more near than the near now! or nearer than the near 0 interest rate now. In the near future the near 0 interest rate will be lowerd to nearer 0 than years past.

slaughterer's picture

They actually have, in effect, a negative interest rate, and will need an even more negative interest rate in the near future.   

gkm's picture

Indirects buying gold instead.  Directs doing the prop job.

Once upon a time, banks that issued paper chose to stop accepting that paper against debt obligations.  I wonder if we are at such a time once again.

narnia's picture

Worthless government promises did not become more valuable this morning than they were yesterday.  

Long-John-Silver's picture

I'm staying a long way away from this massive bond bubble. When it goes KA-BOOM it'll make the housing bubble look like a tiny blip.

bbq on whitehouse lawn's picture

To me this screems QE3. No one in their right mind would buy these bonds unless the Fed was going to buy them back.

2-3 months tops and QE3 kicks in if not this month.

Unless something is happening with the Euro, China or FX markets the forces buying in US Treasuries at any and all prices.

Will world leaders really risk world wide riots so a few banks dont instantly crash. Dont answer that.

Sudden Debt's picture

You couldn't be more wrong... they are going to call it: QE2.5!


gookempucky's picture

American fiat value disappearing before the public.s eyes and they dont even get it...that being said went to westlake hardware today and upon recieving my change I noticed it was a negative return.....yield drops below 2 and AU will be 2k+.

Hard1's picture

1999 - DotCom Bubble

2007 - Housing Bubble

2011 - US Gov't Bond Bubble


Mr Lennon Hendrix's picture

Someone has forgot to tell Bernanke.

slewie the pi-rat's picture

"Either the Fed's proxy account finally came out of the closet or China is now very confused..."

yes, there is that pesky problem about how to "account" for china, which doesn't like getting shoe-horned into "categories" and seemingly wants to be "special" to the FED. 

but, i don't think the FED wasted any ammo trying to "insure" the 2.14% on the 10-year. 

maybe the PDs had enough orders for these notes to place their orders at auction time to buy the damned things. 


with the bond now = 138.8, up 1.6, perhaps we could postulate retail demand.  for a change.  it may not last, but hey, let's recognize that it is here, at least for now, in this equity sell-off: retail demand for USTs. 

wheeeuuuuw!  the vigilant ones are in dire need of an adult diaper change!

slaughterer's picture

You just got to think of shorting the 10-year here. 

Downtoolong's picture

I view investor’s flight to Treasuries for so-called safety as a measure of just how sick the markets really are. Running to a market in which the issuer of the securities has already shown a propensity to massively intervene in ways that destroys the investment ala rates of return so low it guarantees their wealth will lose purchasing power over time. How sick is that? It’s like begging the wolf master for protection out of fear from the pack after he just cut off your arm and Fed it (pun intended) to them.

Drag Racer's picture

Mexico to Sell 100-Year Bonds to Tap Into Rally Fueled by U.S. Yields Drop


great for my retirement plans... oh wait

jon's picture

perhaps there are a bunch of entities among the indirects which are legally barred from investing in anything that isn't AAA?

Rollerball's picture

ding ding ding ... we have a winner!

ThirdCoastSurfer's picture

Talk about a cluster f backfire! Ben still thinks forcing rates down will spur risk in the traditional risk based asset classes, but clear evidence now proves the opposite is true!

The real risk is now in bonds, where it doesn't belong -just look at the returns (no risk, no return after all)!  The vigilantes will not stop until it's all driven to par, maybe beyond! 

Time to give up the ghost, admit defeat, & pop the precious metal and bond bubbles.  Announce it's "Tulips for Algorithms" and "Flowers for (Ben B.) Algernon".

The bond market needs the same kind of scare to show that the Fed is just as in control of bond pricing (down as well as up), as they are in equities, and bidding up the price should be done with caution/knowledge/fear that the Fed may move against you (something like the SPR release in oil) and not in the full abandon that the profit in bonds is in driving up the price and not the interest rate return. 

Dr. Engali's picture

I agree the risk is in the bonds but I think this is the risk Ben wants. I don't think he gives a damn about people going into the market. Just the opposite he wants fear of the market forcing people into bonds. The government cost of borrowing is almost nothing. In that respect he has been a smashing success

Johnny Lawrence's picture

If you study previous economic collapses of this magnitude, the rally in bonds is not surprising.

And if you're a contrarian, you were buying bonds over the past several months.

ThirdCoastSurfer's picture

Exactly! Congrats on your vision, but why then does the Fed need to get/stay involved to the extent they have? Like all the other collapses fear takes care of itself without the need for outright shoving towards the exit, must less a push. The 2 year at .25% is a post crash rate, historic, way past all other collapses, not when S&P earnings are still at $99.  

This time is different because while "fear" is the talk, the action into bonds is from the smart money, like you, who have seen through the BS (or manifest destiny if you like) and are driving up the price for profit, not fear. The market is so much bigger than equities, driven by so many more well educated players, how can "fear" at this point influence such stalwarts, to this nth-degree?  

At this rate the bubble will burst when you and the rest of your moneyed friends take your money, en mass, off the table because the rock is out of blood, not because the economy is improving & inflation is looming; just the opposite, right? My bet is that you'll be long gone as soon as NFP prints a game over negative. Good luck. 

LookingWithAmazement's picture

Told you so many times: a massive run into the bonds was coming. Now up for a correction in gold, shaking out the opportunists.

laserjock's picture

Someone explain to me how to protect yourself with gold when people can flood into instruments like GLD and IAU and inflate that price away leaving it vulnerable to a crack-up boom.  It seems like you can run up the price in anything given enough volume, and destroy the price with enough redemptions.  Yes, I know GLD and IAU are not "real gold" but the spot price of gold certainly reacts if enough people flooded into those funds.

MyKillK's picture

Gold is a buy-and-hold investment. Sure it can get taken down, as we saw in 2008, but I knew it would recover with time.

I will be riding out this entire cycle which still has an entire phase left to go. $4000 top sounds reasonable to me.

mailll's picture

Does this huge increase in direct bidders mean that QE3 is already happening but in secret?  Why are we always the last ones to find out?

chinawholesaler's picture

Wholesale Glass
Wholesale Mobile Phone

Wholesale Waterproof Case
Wholesale Clothing

Advertising Material
Lunch Box
CD Holde

Sport Items
Wholesale TelePhone
Wholesale USB Products

Wholesale Sticker
Giveaway Material
Wholesale Sticker

Money Bank
Wholesale Glasses
Wholesale Bookmark

Silicone Products
Entertainment Supplies

Wholesale First Aid Kit
Bottle Opener
Baby Products Suppliers

Promotional Items
Wholesale First Aid Kit
Safety Suppliers

Bottle Opener
Wholesale Carabiner
Wholesale TelePhone

Industrial Supplies
Wholesale Mp3
Wholesale Glasses

Wholesale Mobile Phone
Wholesale Calculator
Wholesale Pin

Wholesale Puzzle
Safety Suppliers
Men Beauty Care

Safety Products
Wholesale Earphone
Silicone Products

Wholesale Earphone
Medicine Instrument
Wholesale Calendar

Wholesale Stapler