7 Year Auction Tails As Treasury Sells $29 Billion At 1.42% Yield

Tyler Durden's picture

The belly of the curve got whacked in today's $29 billion 7 Year auction, when the high yield of today's debt issuance came at some 1.416% (32.5% allotted at the high), outside the 1.408% When Issued, the first tail on a 7 Year of short maturity bond in a while, and a modest cause for concern, if not quite the "massive rotation out of bonds" we have been hearing about for months. The internals were hardly indicative of a major weakness, with a 2.60 Bid To Cover, below last month's 2.72, Directs taking down 19.75%, Indirects 38.21% and Dealers holding on to 42.04%: all in line with recent results as can be seen on the chart below. The yield, however, was well above December's 1.23%, and the highest since February 2012, when as today, things were supposedly getting much better and inflation was just around the corner, when it was really just the LTRO effect and some $1.3 trillion in liquidity courtesy of Europe.

Based on our back of the envelope calculations, once the debt ceiling
is lifted however briefly, the new total debt on the US books will be,
as of this moment, over $16.5 trillion.

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DrDinkus's picture

anybody else feel snake bit lately? january has been a bloodbath.

NotApplicable's picture

I'm becoming of the opinion that NONE of these auction metrics have any meaning whatsoever anymore. They all seem to merely be indicative of all of the balls that Benron is juggling, where the current metric on the move is the ball currently in his hand.

In other words, ALL noise where the signals used to be.

VonManstein's picture

impossible!!! Ben is all powerfull rates will never rise!! Totaly manipulated market and they are in complete control!!

said.. more or less... by "lawsofphysics"


LawsofPhysics's picture

What's that yield up to now, a whole 1.42%?  Oooo  scary.

Plot that bond price from 2001 until now, tell me what you see in the last few months.  I'll give you a hint - "range bound".

< sarc on > Yeah, I am sure that a functioning capital market is supposed to do that and these yields reflect a true cost for capital < sarc off >

Please...    weak.

VonManstein's picture

blabla cost of capital

its a manipulated market so obviously it doesnt bear reality on anything.

just pointing out that yesterday you went on a rather snappy rant about this that and the other saying my idea of bonds moving lower today was "bullshit" and that i wasnt "astute" enough to read without added emphasise (something youve forgeten to add today i see)

I say any FED statement will result in a sell off. Breifly however as things will remain orderly for now.. bonds are going in the wrong direction for "them" and thats what matters.
just get your metal as when they start going then rates will start moving fast.

LawsofPhysics's picture

"manipulated market so obviously it doesnt bear reality on anything."


Nothing more to say really.  Here, let me throw a few more dimes out in front of that steam roller for you.

Don't worry, have plenty of metal.

VonManstein's picture

i was agreeing with you you pleb.

"these yields reflect a true cost for capital" was your sarcastc remark.

I agree. they DO NOT REFLECT REALITY and the cost of capital...

jeeez whats your problem are you depressed or something?

CrashisOptimistic's picture

The Fed is buying Treasuries.  If you're selling, you're fighting the Fed.

The Fed has more money than you do.  In such a battle, you will lose.

LawsofPhysics's picture

You lose either way since the yield is well below the rate of inflation.

VonManstein's picture

well USH3 has moved around 6% over past weeks so actually i did make 2% or so. Im not interested in big shorts for the reasons you mentioned and i have no position now.


I think the Bond market is finnished

LawsofPhysics's picture

"I think the Bond market is finnished"


If you are right on this, it would be a huge (iron balls) bet.  I am somewhat positioned for this, but should the bond market totally dump, WWIII would be right around the corner and you might not actually get to enjoy (or see) the payout, hence the metal hedge.

Big Slick's picture

Brass-balls short.  Avoiding any time dependency

VonManstein's picture

i think we agree and are on the same same page. you just need to chill the fu*k out and accept that yesterday you were very slightly over the top and yes bonds are falling in an orderly fashion.

i offer a truce.

if in 5 mins the USH3 doesnt tank even more then i was wrong... and i dont care as i said no position

LawsofPhysics's picture

Peronally, once the situation gets really desparate for the western world, I see the real contrarian play here being the anticipation of the IMF coming out and saying that "all debts will be forgiven, provided that you accept this new and improved, losely gold or resource backed, multi-tiered, currency, issued by all our super central banks for the United States of Europe." I only say this because centralization in the financial and military world has only been accelerating since 2001.  Many of my former colleagues from the ARMY have been doing increasingly more consulting gigs around the world.

VonManstein's picture

Like i said yesterday.

bonds will tank. sell the fucker on a spike.

dollar will fall.

Its becoming obvious the FED is powerless. 85$ a month for flatline to down. what the hell is Benny going to do some kiind of magic trick and pooof rates are where he wants them? This game is very almost over. THE MARKET IS BIGGER THAN THE FED. laws of physics do apply.

Only little suprise today was stocks down too and metals up nicely.

I expect Gold in 1800 February and If silver closes teh week >32.50 then 35 next week easy.

so .... red bonds red stocks red USD green Pms all on FOMC day. and even if TSy finnish flat by EOD (unlickely) its still a disaster as it comfirms powerlesness.

War may help... then again it may not.

Crash helmets at the ready i say and get your CNY and PMs

Village Smithy's picture

You can't make nothing out of anything in this free-for-all. Maybe this is the first sign that the bond bubble is about to burst, and maybe its just the PDs giving the bond market a little scare to help with the "Great Rotation Theory" and get some more muppet money spilled into the Dow. These #ucks have been given license to pull every chain and push every lever in their corrupt, rotting  game of tricks. As long as it drives up equities the DOJ has been told to turn a blind eye.  

LongSoupLine's picture

just more fucking worthless fucking paper to monetize and pump like hot fucking shit into the "market" in order to buy other worthless fucking paper.


Fuck you Bernanke and a new huge fuck you to Jack Lew.  assholes

PAWNMAN's picture

Look for smoke billowing out of the Fed complex as Big Ben maxes out the printing presses. Might as well make a push to buy up 100% of all issuance. We are in the end game my friends.

youngman's picture

Is it white smoke or black smoke.....then we know if we got a POPE or not

youngman's picture

How about look at it this way....stocks are way up....oil and gas going up....looks like PM´s are finally going up....but bonds have barely budged....when the other markets have gone up 20%....do you think some of the "real investors" might bail on bonds to catch the train that already left......but what % he owns now I have no idea....is he only 10% now...or is he 59% maybe...I don´t know

dunce's picture

Who is buying this garbage? 7 years at minus 2 % desecrates the prudent man rule. Which also makes you wonder where are the prudent men, and why are not any of them in positions of authority and responsibility?

eclectic syncretist's picture

The Fed is buying it with the paper funny money bills of credit that are flying off their printing presses.  Of course they don't give the stuff directly to the Treasury, because that would be too blatantly unconstitutional.  So instead they cut the big banksters in and give them a free cut of the action for doing nothing more than acting as middle-men to help launder the crap and make it less obvious that what is going on is simply immoral dilution of the dollars alread in circulation.