This page has been archived and commenting is disabled.
Is This The Chart That Scared Bernanke Straight?
With the confusion over Bernanke's comments - "have no fear as the economy is bad enough that the Taper will never come" confused with "the economy is picking-up and that's great so we don't need the Fed anymore" - one has to ask, as we have numerous times, is there another reason for the Fed to start the ball rolling on the Taper talk? In the last few weeks, the Treasury market's yields have risen notably but much more critically, the fails-to-deliver has surged.
This critical indicator of both collateral shortages and technical carry trade unwinds is a little-discussed indicator of just how broken the market is thanks to the overwhelming ownership of the Fed. It's getting worse - as Barclays warns the weakness in bonds is feeding on itself as more people want to short and so the need to borrow from the Fed (as dealer inventory is so low) increases and raises the cost (special-ness) of that short.
Simply put, the main reason the Fed is tapering has nothing to do with the economy and everything to do with the TBAC presentation (rehypothecation and collateral shortages) and that the US is now running smaller deficits!!!
Source: NY Fed
»
- 57630 reads
- Printer-friendly version
- Send to friend
- advertisements -
Losing $200 billion on his treasury holdings scared him enough to call his mouthpiece, Hilsenrath.
So the FED is trying to unwind the carry trade?
No, the NY Fed may be in fact aiding and abeting primary dealer and hedge fund "investors" in shorting treasuries by "lending" them collateral.
It doesn't get much lower than that.
Thanks, the post confuzzled me.
"Screw the middle class coming and going" from the FED makes perfect sense though.
I would think this is the chart that scared the crap out ot the Bernank
http://www.marketwatch.com/investing/bond/5_year
take a look at that chart in the 3 month and it screams QE4eva
I drew the channel in on it when viewed as a 5 year. Looks like if it goes over 1.77, lookout.
And we have lift-off! of the interest-rate havoc mission to go and destroy all house-of-cards through out the world and then return for a hyperinflationary landing at home base, the US.
What's the bigger joke. Washington actually running smaller deficits or the fact that the only "real" collateral available in the market has been reduced to US Treasuries (offered with no collateral, no cash flow, and every right of the government not to repay you if they feal like it)? Of course don't worry as once the tax benefit realized from everyone accelerating gains and payments in 2012 runs it course this year and increased interest rates result in increasing the government's deficits, plenty of UST's will be available to buy later this year and into next.
Hard to believe that anyone actually considers UST as solid collateral but then again, in this twisted financial world we live in, nothing surprises me anymore.
Ironicly, higher interest rates will drive the deficit back higher, thereby making more treasuries available.
" Is This The Chart That Scared Bernanke Straight ..."
And burnt the topless towers of Ilium?
Only Helen of Troy's hairdresser knows for sure!
I guess margin is almost the same thing. but yeah, they have to reduce some leverage in the system for stability. the stupid thing is they could increase margin requireents and leave the program alone. last time they raised margin requirements we at the low in the 70's. not sure why they don't use this tool. they have the ability.
sorry no link, but as per nytimes article
The yen and Abenomics scared Bernanke and nothing more.
Here is a good fails charting site for stocks and ETFs: http://failstodeliver.com/
Can you explain to us newbies what "fails to deliver" means in this context? Thanks.
It means someone bought a share of something and it was not cleared and delivered to the purchaser...for whatever reason. The total listed for each day on the charts is the grand total of new fails for that day minus finally cleared, plus old fails that remain uncleared. I think it is three days undelivered to show up on that list, but I cannot remember exactly. Might be 7 or 10 before it goes on the list.
It's a lame ass weasel that can't sacrifice and quickly pay off a $27,000 loan. Especially when living with parents. And even with a low paying job. Deadbeats.
Oops. Landed in wrong thread. Still applies.
lets see sell ai computers and drones at pennys on the dollar or more qe. they will be yellen for more qe
I don't think that is about smaller deficits. That is about fraud which the Fed is currently subsidizing. Wait until they crack open all those MBS they have been buying. I am sure they bought Tower 7 at least 3 times and The Empire State Building 9-10 times.
Dave in Denver: "...the Government has already incurred a $626 billion spending deficit 8 months into its fiscal year (end of May) when the CBO released a report three weeks earlier on May 8th that projected a full FY deficit of $649 billion..."
and this, re: deficits ~ http://truthingold.blogspot.com/2013/05/the-bs-is-flying-at-us-everyday-now.html
I have little understanding of these complex matters, but I assumed the catch-22 was simple:
Recovery is based (large %) on house prices & getting $1 trillion of underwater mortgages out of the hole. Which relies partly on:
U.S. real estate investment trusts plunged, capping the worst two-day decline since October 2011, as investors sold shares of the companies vulnerable to rising interest rates.
The Bloomberg REIT Index fell 4.2 percent, extending a 3 percent slump yesterday, to close at the lowest level since December. Single-tenant real estate landlords, which are viewed as bond-like investments because of their long-term leases, led today’s decline with a 5.5 percent slump...
REITs, which pay out most of their earnings as dividends, have more than doubled since 2009 as low interest rates fueled demand for higher-yielding investments. The 129-member Bloomberg REIT Index has tumbled 16 percent since May 21 as the yield on the 10-year Treasury note began to climb...
“Their relative value is gone,” Guttenplan said in a telephone interview. “There’s really not much more room to run for the REIT sector.”
Ventas Inc. (VTR), the largest U.S. health-care REIT, sank 6.1 percent to $64.38. Boston Properties Inc. (BXP), the biggest office REIT, slumped 6.5 percent to $100.58. Simon Property Group Inc. (SPG), the No. 1 U.S. mall owner and biggest REIT, decreased 4.9 percent to $154.58.[Bloomberg 21st June]
Same issue as Japan - if interest rates rise, you tank the market.
Please do correct me if I'm wrong, I've not got a PHD in economics.
"Please do correct me if I'm wrong, I've not got a PHD in economics."
Nor do you have a beard. So quit flailing around in the dark.
If someone is flailing, aren't you supposed to illuminate the issue with your lamp?
I'll defer, and remain ignorant on how this is supposed to work out mathematically.
Speaking of tapering, Doc says my Gall bladder needs to be tapered. Last time i checked, Gall bladder tapering cost 14,000 of those so called Benny bucks
my father used to tell me after hed get drunk,
son I promise I wont drink more,......nore less ya little fuck.
"I think the warning labels on alcoholic beverages are too bland... I would suggest: Alcohol will turn you into the same asshole your father was."
– George Carlin
Get the NY Fed to stop securities lending of $20 billion a day to primary dealers (and then to hedge funds) and treasury yields go back to their lower levels.
Time for them to stop ponying up to the criminals - enough!
Nanke......they will remember the name.....they won't be good memories.
Aurora,
If you had a PHD in Economics you would be as confused as Ben B.
"... the US is now running smaller deficits!!!"
Apparently the shithead that wrote this did not check the "corrected" budget deficit figures.
The projected fiscal year deficit of $642 Billion was reached at the end of May!
That leaves 4 months of future deficits, to easily reach the "happy" $ Trillion deficit figure.
It won't be $1T. The sequester chops 56B and the millionaire tax increase in January is worth about 150B. It will be 700-850B, about 150B more than CBO is projecting.
About 100B is one time stuff coming in from Fannie/Freddie, too. That won't be there next year, and let's note with the big jump in interest rates we will have about 60% jump in interest on the budget from the 17T debt.
The game changer was Japan going all in and globally if Japan reaches the measure of "certain default" what then?
All nations, the FED included by using QE worsens Japan's position and then the credibility of all central banks is over. You might want to keep using QE but can you afford to let Japan go over a fiscal cliff? If not then the taper will happen otherwise it is certain game over.
Please show us the 10+ year chart for this......two months means nothing.
Who has been fined or even yelled at for Failure to Deliver? Nobody! Look at the rehypo noise BIS is making in Europe, that might have more to do with market melt-away than QE issues jitters. The liquidity mirage in China looking a little crusty lately is another good dose of jitters.
Fed follies is just the center ring in the circus where the big tent is on fire.
300 bps per million adds up (fail charge)
That's an annual rate.
With bond prices falling fast, seller is going to be tempted deliver the goods late. He can buy them later, cheaper than he already sold them.
Which country are you talking about with smaller deficits?
I'm sorry, I'm dumb. Can somebody explain (or point me to) what "fails to deliver" means? I think I need Zero Hedge Jr.
I sell you a security to be delivered, let's say, next day. But I don't own the security and I can't find one to deliver, so I fail to deliver.
It's when your s/o plays the "not tonight honey, I have a headache" card.
Also when someone represents that they have an asset to sell, and they sell it, and then don't deliver it (or legally transfer ownership) within some arbitrarily determined time limit.
Shortening of the collateral chain is the solution.
Failure to deliver bonds by sellers to buyers.
http://www.ny.frb.org/research/current_issues/ci11-9/ci11-9.html
failure to fail
Did the national debt just get more expensive? (which will soon need the ceiling raised)
So the Fed will hold onto its previously purchased low interest treasuries to keep the cost down? Was this part of the plan?
I don't get this. Why do "smaller deficits"--a smaller need to borrow--prevent the Treasury from issuing new notes/bonds anyway? Just to have more cash on hand so to speak.
As the deficit shrinks, risk assets correct, and collateral needs rise, Treasury prices are set for a sharp rebound.
The federal deficit will start growing again, in fiscal 2015 (start Sept 2014). At some point in 2015, the Fed will have to reconsider ZIRP -- but not before.
Meanwhile, the bond market is just confused.
Ben needs to be nicer to the Chinese looks like so they buy more bonds. Maybe the Fed can hire a bunch of young girls with mini skirts to sell Gubmint Bonds...like...well, you know which country.....
I guess telling those a-holez to stop selling/lending/pledging gold and Ts that they don't own is out of the question. [/sarc.]
If we run out of treasury, why the rate goes up? Author has some explanation to do
yeah, in many ways this theory doesn't hold water. If the fed sold treasurys it would crash the market and yet the author thinks that if more treasurys were available to be shorted (or available for purchase as collateral for even more margin borrowing) this would be a good thing in the eyes of the bernank? It might look good for JPM's quarterly earnings but it damn sure wouldn't do their asset book any favors over the long haul. Not that anyone scrutinizes bank ledgers anymore, at least not the real ones, but still.
All there is is stuff, people & medium of exchange. So when there's less stuff & more medium of exchange what do you do. You create new mediums of exchange & gamble with it. And the ones with the most medium of exchange wins ----- the banks. So they can buy all the stuff entrepreneurs need to produce more stuff. So there's less stuff, GDP. Real GDP, not all the meaningless crap the assholes put in there.
And if the banks lose on some gambles, the fed (a private company) will just creates some more digital medium of exchange for them out of thin air. And they don't have to work for it like everybody else.
Sorry --------------
Ben Bernanke is STRAIGHT? Did you tell that to Jon Hilsenrath?
the bernank still has a little on his chin. don't think he's straight.
http://hat4uk.wordpress.com/2013/06/20/at-the-end-of-the-day-300/
...
sorry, can't sell you more of that shit, you already own all of it ...
MARKET ???
a "market" is an illegal activity, check with your
tax attorney.
Zerohedge is the barometer.
It's all a psycho game. Suffer until the banks, politicos and MSM screams for more QE to save the sinking ship. Then we will get more QE, not less.
Maybe I look at the wrong place, but weren't the figures for w/e Sep 24 2008 (released Oct 02 2008) 1,846k and 1,698k for receive and delivery failures respectively?
Which is much higher than the approx 160k for both shown in the chart.
So current figures nothing special?
Watson
If true, there is a ton of municipal debt that needs to be buried somewhere.
Doing some quick rough math, after revisions and at about the median sales of all months actual sales, then March 2013's new home sales were 42,000 and existing home sales were 387,000 with a median price of $183,900. If we combine new and old times the median of the old we get $78,893,100,000. If the Fed is buying $40 billion of that, or roughly half (which does not includ refi's), it's (still) hard to see how anyone can say that these purchases are not having a dramatic impact on the RMBS market and it's elimination, if you believe that home price and interest rate have an inverse relationship, will not have an equally detrimental effect in the absence of dramatic wage growth -much less employment.
MEANWHILE:
"Federal prosecutors have filed a sealed criminal complaint against Edward Snowden, the former National Security Agency contractor who leaked a trove of documents about top-secret surveillance programs, and the United States has asked Hong Kong to detain him on a provisional arrest warrant, according to U.S. officials. Snowden was charged with espionage, theft and conversion of government property, the officials said..."
Failure to deliver what?
In this case, bonds.
so the bond market is a shitty clown show where
delivery is not required because you can only service
yourself so frequently in public before the audience
becomes distracted by the insects and other more interesting
wildlife?
this power stuff is so ephemeral and clutching.
Icarus dicurus dock, the sun melted my clock. ....
.
then I forgot what the story line referred to
as the liquidity forgot to which world it referred.
.
I hear gold is on sale on the water planet?
Wait so this means people are literally not getting paid for the bonds they held? Why aren't interest rates going to 20%?? Why doesn't the fed just print the money? Is this referring to bonds the fed holds?
that is a good question and one answered best by the author.
I am no official interpreter of anything but my little
burning candle wick.
there were two links, both require investigation and lead
to now here.
Bernanke can not be scared straight, he can only articulate
the rock surface and the pain of the hard place and attempt
to manipulate the other beings behaviors through talking
shit, or as they say in public, jawboning. his actions
are dictated by the hard place and the rock he envisions and
propagates as reality to the fraudulently induced comatose
and subjected many.
remember, we are talking about money, we are not talking about
the real world or life.
"Failure to deliver"...banksterspeak for FRAUD, or for getting billions of FeRNs by selling something you don't have.
Just like the (not really) Federal (with no) Reserve's "quantitative easing"...easing into everyone's orifices sheepie-style and robbing large quantitties of FeRNs easingly from their back pockets as they're bent over.
And while all eyes were on the markets and Bernanke the USA charges Snowden with espionage and has asked for Hong Kong to deliver him post haste. For a "wacko high school dropout" that "overinflated" his access and "didn't get anything that wasn't already shared by the NSA" he sure is in the crosshairs of the full force of the good ole transparent USofA. Rep. Peter King openly stated he wanted Snowden arrested for his apparent threat to out CIA operatives and give info to China. He hasn't done it, nor had he threatened it in any statements made that I saw but King apparently know what Snowden will do and wants him arrested for something he hasn't actually done. I suppose it doesn't pay to show egg on the face of the US politicians or activities of the "most transparent administration" in the history of the US.
Obama states this is a debate society needs to have, privacy invasion vs security. He just didn't elaborate what portion of society will get to join in the debate and it's often hard to debate topics that are unknown to the debater.
OK, could somebody explain "Treasury Fail to Deliver" in terms a financial know-nothing would get?
Sorry for the noob interruption, but, thanks.
http://www.ny.frb.org/research/current_issues/ci11-9/ci11-9.html
Much appreciated, thanks.
Beth Hart LIVE_ Baddest Blues
http://www.youtube.com/watch?v=8te5XmHbDJA
Benny scared straight will not go over well at Bohemian Grove this year.
not sure i understand the chart but 160k doesnt sound like much in the multitrillion dollar scheme of things?
Oh my, what pretty "Daisy chains" of ever cascading fails doth the troubled man see in his future.
All in one day I read...
"With the confusion over Bernanke's comments..."
and another article about the emasculation of the modern day Man,
which mentioned nothing about such pathetic behavior.