$35 Billion In Two Year Bonds Price Unchanged From August

Tyler Durden's picture

Since any debt issued under 3 years during ZIRP (i.e., in perpetuity) is nothing more than a cash for cash exchange, only with the conversion of counterparty risk from unsecured bank obligations (if cash outflow is from deposits) into Uncle Sam exposure, it is no surprise that today's 2 year bond auction was a snoozer. Sure enough, the just auctioned off $35 billion in 2 year bonds came at a nominal yield of 0.273%, precisely where it was last month, with investors getting a nominal yield in the off chance that Bernanke loses all control of the curve and hyperinflation arrives in under 730 days. For now this probability appears minimal. The internals were just as boring. a 3.6 bid to cover, lower than last month's 3.94, and below the TTM average of 3.77. Directs took down 17.5%, Indirects 27.27% and Dealers were stuck holding 55.33% of the same bonds that Bernanke will be selling to them soon too, resulting in a PD inventory in the 1-3 year window near all time highs. And following the balance of this week's auctions, which include a 5 and 7 year bond for a total of $99 billion in gross issuance, net US debt will rise by $46.8 billion, which together with an earlier net addition of $13 billion in debt, will take total US debt to just shy of $16.1 trillion.

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mayhem_korner's picture



Socializing counterparty risk is sort of the last bullet in the holster, no?

CPL's picture

Almost time to line up the afternoon ride up of all equities.


HI HooOooOOOo!!!!


LawsofPhysics's picture

Direct monetization with minimal disruption, mission accomplished. fuck you bernanke.

Dr. Engali's picture

John: Hey do you have a dollar I can borrow?

Joe: Sure but don't forget you already owe me a dollar.

John: Sure thing thanks.

Joe: No problem.

John: here you go Joe.. Here's the dollar I borrowed now we are even.

Joe: ?

Debeachesand Jerseyshores's picture

With inflation at the "official rate " of 1.7%,that .0273% yield is just a plain old Negative yield period.

mademesmile's picture

Didn't we just hit 16 trillion 2 weeks ago

Urban Redneck's picture

Bernanke Doppelgänger

From the other side of the pond-

Ratings agency Standard & Poor’s estimates that Switzerland bought €80 billion (SFr97 billion) worth of bonds issued by the “core” eurozone countries of Germany, France, the Netherlands, Finland and Austria during the first seven months of 2012.

This amounts to 48 per cent of those countries’ collective full-year deficits, of which Switzerland bought only about 10 per cent in 2011.