Direct Bidders Take 30% Of 2 Year Auction As Indirect Flight Continues

Tyler Durden's picture

There may be rotation out of bonds (there isn't), but don't tell the Direct bidders, who submitted a total $22 billion in bids for today's $35 billion Two Year auction, and well below last month's $18.2 billion, and were hit on just under half of this tendered amount, taking down a massive $10.4 billion, or precisely 29.99% of the entire auction. This was the second highest Direct takedown in history only less than October's 35.41%. What is curious is that Indirect buyers, traditionally strong buyers of the 2 Year point on the curve, and taking down on average 31% in the past year, were left with just 18% of the auction, slightly better than last month's record low 17.7%, and the second lowest as far as our time series goes. The balance of 52%, as always, was left to the Primary Dealers, who will promptly turn around and flip it back to the Fed at the first opportunity now that the Fed is monetizing across the curve and not just to the right of the belly. Other metrics of today's auction included a 3.77 Bid to Cover, roughly in line with the trailing 12 month average, and higher than December's 3.59, while the final high yield was not surprisingly, 0.288, just inside of the 0.289% When Issued at 1 PM trading. Overall hardly a flight from Treasurys, at least in the segment where the nominal return is absolutely laughable, and an indication that nobody believes for a second that ZIRP may be ending any time soon.

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LawsofPhysics's picture

ZIRP can't end unless you really believe the U.S. can pay more interest and still meet future obligations.  ZIRP ends when the dollar dies, not before.

SamAdams's picture

there you go again using logic.  terrorist....

AldousHuxley's picture

Japan in ZIRP.... since 1996

walküre's picture

The 2nd phase of their coup d'etat is to raise rates on the illegitimate deposits and gains they've made. They've sanitized the fraud and cleansed the bank's balance sheets. The banks are sitting on paper and "demanding" more for their deposits.

The people didn't fork these m'fers when they used the Treasury to bail out the banks and repair their wealth. The people won't go on a rampage when they start to raise the rates either. Most people don't get it. They don't understand what happened and how they've been conned and will be conned again going forward.

This is the biggest fraud on the people in the history of mankind. None of the paper wealth is real. The numbers are all bogus and the value of their perceived wealth is reliant on a gullible populace who would rather be entertained with bread (EBT) and games (NFL) before they would ever put into question the fact that banks are making profits and paying bonuses based on a fraudulent system.

If they want more and they think they can get away with it, they will raise the rates and have all the slaves peddle harder and faster to ensure the fat paycheques for the elite are not stopping.

Why is this so hard to figure out?

LawsofPhysics's picture

The con is not hard to figure out.  What is hard to figure out is when will the supply lines break?  History is very clear on what happens when capital is mis-priced, mis-allocated, and mal-invested.  

The big difference is that this is the first time in history that the entire planet (with a few exceptions) has been participating in the fraud.  Europe went through this at the turn of the century and it cost the world some 80 million or so people.  The population was under 2 billion at the time.

Play all the paper games you want, that which cannot be sustained, won't be.

SamAdams's picture

The stakeholders will keep the ponzi going as long as possible, and when the destabilization is such that their control is in jeopardy, then the paradigm will shift.  I personally believe the collapse is still a few years out, especially if we can add some steam to the current world war (don't tell me you didn't realize more than 20 countries on 2 continents = world war).  Watch the schedule of whatever gun program is passed for additional clues.

AldousHuxley's picture



continue ZIRP (despite real inflation)

continue QEX (negative interest rate)

continue importing legal and illegal labor  (despite unemployment rate)



walküre's picture

I'm a grower and breeder. My prices are firmly going up despite the "race to the bottom" we're in. Preferred method of payment is silver or cash (which gets converted). That is all I can do for the family from my end. The fuckers on Wall Street have overdone it this time. Not that they've ever played by the rules to begin with!

TrumpXVI's picture

Oh, but ZIRP is ending, it IS ending.

Everybody has gotten the memo and is rotating out of Teasuries and gold and into equities.

Everything is fixed.

Time to be Happy!

youngman's picture

That is the talking point I have heard several times by the talking heads...."all that money on the sidelines is coming back...time to jump in...out of bonds into stocks...."...if I have heard it once...I have heard it a hundred times....its the new mantra for the business news.....something is up

TideFighter's picture

Collecting on my 18% REIT, forever.

CrashisOptimistic's picture


Don't fight the Fed.  They have explicitly said they are buying Treasuries at about $45B/month (the other $40B MBS -- funny how no one ever asks from whom they buy the MBS and how the price is established). 

But that's just the way it is.  The Fed is buying Treasuries.  If you're selling, you're fighting the Fed.

fonzannoon's picture

Don't fight the fed is going to go down as the all time worst advice ever given.

NoDebt's picture

Eventually.  You forgot the eventually.

Having bad timing is the same as being wrong. 

SamAdams's picture

Don't fight the FED!  NEVER SHORT!!!  The market will remain irrational longer than you can remain solvent ($85B a month says so)....  FUNDAMENTALS DO NOT MATTER.  BUY THE DIP!  RINSE & REPEAT!!!  The only real trick is getting out with the big boys when the time arrives. 

LawsofPhysics's picture

correct.  For now, investors remain free to buy/sell what they want.  The hundred trillion fiatsco question is how long will the rest of the world let this go on before everyone calls in all those paper promises (not just in bonds, but the fiat itself).  To the modern MBA, everything has a selling price, they cannot comprehend the idea of something no one wants to buy or something no one wants to sell.  Just go ask one what the "price" would be in these situations and watch their head explode.

NoDebt's picture

Who?  Who is this "rest of the world" you are referring to?  Every country everywhere is doing the same thing.  None of them are going to call in shit.  It would be cutting their own throats and they know it.

walküre's picture

Which is why every last one of 'em is openly and not so openly stacking gold and silver. Their propaganda and lies are buying them time. That is one of the most valuable commodities for the vermin. The more time they have, the more they steal and prepare. Nobody trusts anyone in this game of global finance.

LawsofPhysics's picture

Correct, the exact same thing that all the major players involved in starting WWII were doing.  Except now (as the poster abve points out) it is the entire world.

LawsofPhysics's picture

Bullshit.  When supply lines break or cannot be met, you'd be surprised by what countries will do.  History is very clear on this.

eclectic syncretist's picture

A malevolent maelstrom of meaningess machinations designed to cast dust into the eyes of the populace.


The fed sells something it never had, then it immediately buys it back and gives it away at zero interest.  This is how we save the global economy.  And the man on the street thinks some sensible and hard-working honest people who know more about it than he does are doing these things to try and help him???  A country full of suckers, that's what it really is.

Bam_Man's picture


Any short term weakness in Treasuries - such as we've been seeing this month - is entirely engineered by the PD's in order to buy more cheaply before handing off later to the Fed.

It is ZIRP4EVER and its effect on the term structure of interest rates is continuous and immutable.

Charles Wilson's picture

How to know the Top is in:

Day or 2 ago, Drudge runs small headline from a NYT piece: The Little Investor is Back in the Market.