Guess Who Continues To Not "Rotate" Out Of Treasurys And Into Stocks

Tyler Durden's picture

Those who read our article on this topic at this time last week should already know the answer to this rhetorical question. Everyone else may be a little surprised to learn that at a time when every Primary Dealer's sales desk has been pushing what little is left of gullible investors into stocks because the "Great rotation out of bonds and into stocks is our Top trade of 2013" (source: [every sellside strategist]), just as these seem poised to tumble in a recreation of the August 2011 debt ceiling fiasco (as we have been warning for months), their holdings of these same boring old Treasurys once again rose in the latest week ending December 19, increasing by another $10 billion, and hit a fresh all time gross high of $146 billion. Judging by what is increasingly a rotation out of stocks and into bonds, the smart money - correction the only money remaining - appears positioned correctly once again.

Remember: always do what they do, not what they say.

Source: NY Fed Primary Dealer Holdings

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lasvegaspersona's picture

so you are saying 'do what they do and not what they say'...interesting

francis_sawyer's picture

I seem to remember them 'saying' gold was not money...

Ying-Yang's picture

It may be Gross.... but

In making that judgment, Mr. Gross said he is more focused on the Federal Open Market Committee's new threshold of a 2.5% inflation rate than on its rule that rates should stay low until unemployment exceeds 6.5%, the economic benchmark that gained the most attention.

"The Fed may never raise short term rates until the Fed's inflationary expectations rise above 2.5% over the intermediate term" like one to two years, said Mr. Gross. "I think this means no [rate] hikes at least until 2015 as stated at previous meetings and probably longer."

With that low rate policy here to stay and as the Fed also embarks on a new Treasury bond-buying program for 2013 Wednesday, Mr. Gross said he "would buy five-year Treasurys" to benefit from the fact that such medium-term maturity will now be included in the Fed's shopping list for the coming year.

Never One Roach's picture

Good call Ying. I remember that too from his interview....

1. intermediate bonds;

2.hard assets like gold and oil;

3. strong equities with solid dividends (like Coca Cola, J&J, etc).

mrktwtch2's picture

my woman (who is a senior staff accountant at L3 communications)..wondrd how i can stand all the bs that comes out about the market each day..and i said "its interestin" sorting the wheat from the

Top_Kill's picture

"Remember: always do what they do, not what they say."

Does this include PM's? Cause if so I need to start selling...

john39's picture

if you hold paper pm's... yeah, probably a good idea.  sooner or later, the ponzi will vaporize.

Glass Seagull's picture



"But the Fed's going to buy these babies back at higher prices, right?  Right?" 

[So nervously asked the Primary Dealer]

Water Is Wet's picture

This post is fucking stupid Tyler.  From your article yesterday:

the amount referred to on the balance sheet statement need only be “collateral pledged to counterparties which can be repledged to other counterparties”. A further portion of the financial instruments owned – which is in many cases substantial – is reported in the 10-Q footnotes of “collateral pledged to counterparties which cannot be repledged”.

Primary dealers are obligated to bid at Treasury auctions, and they can still "own" Treasuries after they have pledged them for cash and bought other crap.  So what is the point of showing a graph of what Primary Dealers may or may not have repledged?


I think other metrics may be more interesting.  Using Dollar terms may be a bit misleading. What about % of their balance sheets?

It makes sense that treasury holdings are at all time highs (dollar terms) since there are $16+trillion in supply. 

Super Broccoli's picture

well it's not a lead there, everyone knows it ! if the fed was shorting tresuries, america will be bankrupt within a minut LOL

Bob Sacamano's picture

Why wouldn't they own lots of Treasuries?  Borrow from Fed at zero and buy treasuries yielding 25bps+.  Risk free income for them.  

The August 2011 debt ceiling / downgrade fun was good for Treasury bonds (not bad) as best I can tell.  Rates are lower (prices higher).  Seems like doing it again would yield the same result. 

buzzsaw99's picture

the last sentence of your first paragraph says it all

MrPoopypants's picture

Shouldn't it read "Great rotation out of bonds and into stocks is our Top trade of 2013"?

UnRealized Reality's picture

That's what I would think. It makes the most sense. If Treasuries is going to blow up, get the hell out. Plus Equities are safer, there are companies out there more stable then some countries. Remember is the DEBT. But all the ZH'ers are doom and gloom and for some reason want the market to go to zero. OOPS except for gold because that is the only thing worth a damn,LOL

edb5s's picture

If anyone is up for a good laugh, check out this link (I accessed it through the NY Fed PD link Tyler provided):


MF Global's application to become a primary dealer.  "MF Global is uniquely qualified and positioned to provide value-added services to the Federal Reserve Bank of New York."  "Our interest in pursuing this designation is client-driven[...]"  LOL.

AgAu_man's picture

I used to think that the Fed was so old-fashioned with its Flat Earth model, and I was so progressive with the Newtonian monetary mechanics model.

But, come to find out, they are waaay ahead of me and almost everyone with their Quantum Fiscal Dynamics model:  "You just never know what you get".  Love the resulting Uncertainty Principle also.  Silly me.  ;-/

ekm's picture


This is hilarious, super hyper hilarious. PDs rotating into stocks? Ha, ha, ha, ha.


They already own most of stocks and there's nobody to sell them to. What's left to buy? Ha, ha, ha, ha.

This was hilarious. I can't stop laughing.

buzzsaw99's picture

they tell the muppets that a t bond crash is coming while they buy with both hands

q99x2's picture

Slauble says Greece and Spain are returning to productivity after implementing austerity measures and Italy will soon follow as long as Monti's policies are left in place.

I think the F'ker is still drunk.

Who's paying for my education. I want to see the faces in my dreams. I sense it is not the taxpayers at this point but a stinkin Rothschild. If that is the case we're are about to be forced into being productive again through austerity measures (revolution).

Stoploss's picture

I've lost my picture of Obama wearing Lincoln's ass hat.

Anybody seen it??