Treasury Issues Fresh Batch Of 10 Year Bonds

Tyler Durden's picture

The first day of the "next 4 years" is starting in a very auspicious fashion. First, the market crashes. Then, a major blue chip company, Boeing, just announced it would cut 30% of management jobs from 2010 levels. And finally, the US Treasury just added $24 billion in debt, or enough to fund Greece for over one year, sending the total debt load (the US is now at 103% debt/GDP) ever closer to the debt ceiling breaching $16.4 trillion. But don't worry: over the next 4 years, the US government will add another $6-8 trillion in debt, so those who didn't get their allocation in this auction will have more than enough opportunity. As for this one, the yield was 1.68%, the lowest since August (but, but, what happened to the great rotation out of bonds and into stocks?), the Bid to Cover was 2.59, the lowest since last November and only higher compared to August' 2.49. And finally, the take down breakdown was uneventful: 46.2% for Dealers (to be promptly flipped back to the Fed - keep track of CUSIP 912828TY6), 39.7% for Indirects, or below the 12 TTM average of 41.28%, and Directs got 14.1%, also below the average, and lower than last month's 22.9%. As noted: uneventful. As also noted: there will be many, many more such auctions in the future, so those who wish to convert one paper into another will have ample opportunity to do so.

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larz's picture

yay clap clap clap clap

hedgeless_horseman's picture



Anyone want to venture a guess as to what per cent of American voters know what a Treasury bond is?  I would say less than 5%. 

malikai's picture

<-- A treasury bond can be found in a pirate ship.

<-- A treasury bond is caring relationship between two people in love.

Temporis's picture

4 more years!!! 4 more years!!!

Now where the hells my Obama phone, EBT card, unemployment check, and disability check?

Oh, and my wife just poped out baby number 7 so I will need some extra cash for that...

ptoemmes's picture





LouisDega's picture

I have no idea what a treasury market is. Where are those confounded talking bears when you need them?

cocoablini's picture

This pattern developed in 2010 when auctions occurred and Ben had to cattledrive suckers from stocks to bonds and back to stocks again. Fear button when you need to sell treasuries and have banks and England/China/Japan sop up the trash. This is a big auction, on the 10year which is the basis for a lot of private rates and (hahahahahaha) LIBOResque charts.

The FED buys back, prints and floods equity markets to juice the wealth effect.


If anyone thinks BONDS are going to crash, they are in for a world o hurt with this manipulation. The BOND Vigilantes are just doormats for FED POMO

Honey Badger's picture

The Treasury "Market" - as supply increases, so does price! 

vote_libertarian_party's picture

It's the new normal supply and demand economic theory.


The bigger the supply with declining demand the more expensive the asset becomes. buy buy

LawsofPhysics's picture

What the hell is going on?  Algos take down market, but no rotation into bonds?  Methinks 401(k, c, b, whatever) may be in the line of fire, for the poor saps that have them.  Crap, my employees are going to be pissed.  Time to make a some phone calls.

fonzannoon's picture

Looking at TLT seems to show rotation into bonds alive and well. Show me dow -500 the ten year at 2.5% and climbing and gold up $75 and then something has changed. Until then it is the same freakin shit.

LawsofPhysics's picture

If so, then why not keep crushing yields?  There is a lot of room between where we are now and negative infinity.

fonzannoon's picture

That is the battle from here. I think they will try to crush yields. Maybe they will knock them down too. Maybe to zero. Are we Japan or are we greece? My guess is gold and oil are the tie breakers. They both resume their climb higher and higher prices start to embarrass Bernanke. Eventually his nose will be so fkin long at those meetings he will be poking the eyers out of the people in the front row. Starting in December when he goes full fuller retard with LSAP. We are Greece. It's gonna hit us like a mack truck.

thomasincincy's picture

Have you ever had re-fried beans? not bad with a tortilla, some cheese and hot sauce. Throw in some cervesa and a shot of cuervo

TheCanadianAustrian's picture

It's a path of diminishing returns, and the risk/reward profile becomes increasingly stark and contrasted. Even if the yield-crushing were taken to a logical extreme, at some point the capital gains would still not be enough to outpace the inflation rate. But it won't even get to that point. Even before the real capital gains returns of bonds are exhausted, the market will eventually respond to the wrongness of the risk/reward profile. At the precipice just before the collapse, the market will still perceive the chance of a bond crash to be extremely low. However, much like the gravitational pull of a black hole, the sheer severity of the tiny downside risk will completely overwhelm the nerves of the investors, and the event horizon will be passed.

Think of it like this. Early in the bond bubble, investors are picking up $100 bills in front of a lawnmower. Then they're picking up $1 bills in front of a steamroller. Eventually they would find themselves picking up pennies in front of family of sleeping lions. At what point does the market say "fuck this shit, it's not worth it"? When investors' nerves hit a breaking point. Pure psychology. It's that simple.

The MSM is already starting to talk more and more about "possible inflation concerns", especially in the past few months. Don't wait for MSM reports saying "CPI hits 5 percent" because the bond market will already be a smoking crater by the time that happens.

TheCanadianAustrian's picture

I'm not sure if we're ever going to see the 10 year in the 2s or 3s again. There's a good chance that one morning we'll see it at 0.5%, and then when our screen refreshes, it's at 6% or 8%.

Bam_Man's picture

Gold and Silver are holding up surprisingly well today. Hmmmmmmm.

buzzsaw99's picture

Better hurry before Winnie the Pooh bernanke gobbles them all up.

CClarity's picture

 . . . yawn . . . until we get an oopsie - big tail and then whoosh as magnitude of what needs to be rolled over and serviced becomes clear.  As Gundlach said earlier today, he's comfortable with 15% in cash rather than fully invested in bonds that pretend they're getting a risk free return.  Barely any return - especially in the 5 year and under maturities.

youngman's picture

amazing...really...who is buying this crap???

Tyler Durden's picture

The Fed. Recall that the Fed is monetizing $45 billion in all long-dated (10Y+) issuance each month. That's all gross issuance in the 10 and 30 Year sector every month.

LawsofPhysics's picture

shouldn't that be crushing yields even more?

NitneLiun's picture

Not really. Why would yields move downward significantly when there is a sure buyer for any shit that you issue?

LawsofPhysics's picture

So what you are saying is that, given guarranteed demand the price and yield must go up?  In what supply/demand universe does that make any sense?

Is this one of those "there is no spoon/market" moments?

fonzannoon's picture

Romney is gone. A distant memory. Yields SHOULD decline again...Unless people wake the fuck up and start losing faith in the bond market or unless inflationary forces overwhelm the economy.

It sure as shit ain't going to start with the ratings agencies.

LawsofPhysics's picture

So there really is no market.  Oh well, time to pick up some more physical on the dip.

fonzannoon's picture

Don't doubt yourself there. You have been saying that since the day I got here. That and "we will beat expectations the whole way down". Two of the most accurate things I have read.

Urban Redneck's picture

The moment yields go negative then the Federal Reserve has to start paying the Treasury for the privilege of pissing inflation onto the masses (as long as rates are positive they can pass interest/profit back and forth and make the whole thing look "profitable").

NitneLiun's picture

I didn't say yields must go up. I said that yields won't move down significantly as long as the Fed continues to manufacture demand.

LawsofPhysics's picture

fair enough, unfortunately, given the current obligations of the treasury, the Fed will have to start "manufacturing demand exponentially. how's that gonna work out again?

fonzannoon's picture

I would venture a guess that Gross is in there as well. He talks tough but he is picking em up.

disabledvet's picture

And Golden Ax (sp?) ... apparently they're triple short with infinite down on Uncle Salami Paper and have been "forced to cover" going on three years now. Apparently "they're only a trillion in the whole" but eventually that Durden guy will right and then...and then...and then...oh look! A hurricane!

ParkAveFlasher's picture

It's alarming how much money the Fed keeps finding in the laundry!

NitneLiun's picture

I'll give  you a hint. His initials are B.B.

disabledvet's picture

The King is buying? I mean there does seem to be a "Government Blues" thing happening but I fail to see how BB King has anything to do with buying Treasuries on banc. Of course the Mississippi Delta is home to a lot of...

icanhasbailout's picture

These guys turned Ron Paul's sarcastic suggestion into the game plan.

MrBoompi's picture

The Dow is off 2%.  I've lived through a few market crashes and today doesn't qualify.

HaroldWang's picture

Don't know about you guys but I'm grabbing some safe haven plays that are down today like AMZN, LNKD - you know, all those BTFD stocks.

JustObserving's picture

But don't worry: over the next 4 years, the US government will add another $6-8 trillion in debt

Don't forget the $27.3 trillion in unfunded liabilities that will be added.  

viahj's picture

and the $6T+ of GSE liabilities

Bay of Pigs's picture

It'll be a lot moar than that.


Debtless's picture

I do miss hearing that fucking incoherent Thomas Peterffy ad telling us that Socialism is coming to the US and how it makes him cry. And i loved how they added the subtitles a week into the ad run since no one could understand the fucking schmo. Money well spent.

Flakmeister's picture

That was sad, wasn't it...


LawsofPhysics's picture

Yes, I am sure that the rest of the world will be just fine with that.  So will all those boomers holding treasury paper.  This is going to be fun.

tradewithdave's picture

Sorry, but the paper those boomers are holding, well it got a little wet at 55 Water Street (Tower of Power) during #Sandy.  We can send you an electronic file however.  It's something to hold onto when your're having a Higgs moment, that is if you can hold an electron without building a Large Haldron Collider in your basement.  So we'll hold it for you so it doesn't get vaporized, okay?  Now that's better isn't it.

Bay of Pigs's picture

Apparently, some people are still not connecting the dots.

Bawnds will be crushed...

buzzsaw99's picture

god hates republicans. heh heh :ducks:

disabledvet's picture

That wasn't my take on Hurricane Sandy.