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Soaring Yield, Plunging Bid To Cover, Collapsing Direct Interest Make Miserable 5 Year Auction One To Forget
Not much good to say about the just completed 5 Year auction but we'll say it anyway: pricing at a yield of 1.484%, in line with the When Issued, this was the highest auction break for 5 Year paper since July 2011, or just before the great debt ceiling Snafu. What's worse, the Bid To Cover tumbled from 2.79 in May and a 2.81 TTM average to a tiny 2.45, the worst and first sub 2.50 bid to cover since September 2009. And worst was that Direct bidders, until recently some of the most vocal auction participants, and who had been responsible for 15.4% of the average allocation in the last 12 auctions (and a whopping 23.3% in the May edition), crashed to a miniscule 3.6% - the lowest since November 2009. Bid-side demand was frankly terrible with just $85.7 billion in interest tendered, compared to an average number just shy of $100 billion in the past year. This was mostly due to a plunge in Direct tenders from $14 billion to $6.7 billion. The resultant "surge" in Indirect bids was not an indication of interest by foreign bidders, but a collapse of interest by all other classes. Like we said: not much to say here...
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Can't wait to see what the yield will be come the next debt ceiling debate in a few months.
But, much better than expected.
And off the lows of something or another.
This market is precariously close to crashing. It feels like a hybrid of 2007/2008. Buy AAPL puts. If the market cracks, AAPL could see $370-$380.
Those puts have been SO SO RICH for some months now. You need that kind of move just to get your money back.
This pause in yields and ripping higher in stocks is either the greatest suckers rally in history or everything I ever thought was wrong. Which is an excellent probability.
It sure feels like a suckers rally right now. A good bear market will never let you know you're in a bear market. It will just pick you away slowly. Have you seen LAWS around lately? I haven't seen him post in a while?
What about Cognitive Dissonance?
I've seen CD post sporatically, but definitely not as often as his normal. Maybe,like many of us, he needs a break from this madness.
gold is now in deep bear market territory and silver has officially crashed and burned. "what we say is unimportant next to what happens." here's easily the most insane merger in Wall Street history: http://seekingalpha.com/article/1466811-the-glencore-xstrata-merger-will... "245 billion dollar copper mining company located in 50 countries" just in case you think "boy, who could be more stupid than that." originally this deal was valued at 100 billion...right now about 70 percent less than that. "that was from start to finish"...a process that lasted about...oh, a year or so.
Laws posted Sunday, I believe. He had some flooding he was dealing with on his farmland.
I've been telling ya, fonz, these markets move in synch more than you might think. Throw out the ECO101 textbook (inflation good for stocks, bad for bonds), this is a ponzi game and stocks and bonds are playing for the same team. The future is on the other (losing) side ...
I have learned a great deal from deciphering ZH posts. Perhaps it is too much to ask, and I fear that I will be referred to a book, but I want to better understand the results of treasury auctions. More articles like this one will help.
All I care about at the moment is the Chinese banking saga. What happens in a country of 1+ billion people when banks go bust, go "bail-in" and people get angrier than Cypriots. I think it will make everything else look pale in comparison. None of this other stuff will matter much at that time as nobody saw this one coming down the pike. That is truly a zero hedge world we live in.
It'll boost CNN ratings when once again the tanks roll over the paper mache statue of riberty, suddenly foxconn won't look quite so bad to the people of prc.
Ah, 2009, those were the days.
So this is what Zero Hedge means. I always wondered.
What does "A Zero Hedge" mean to you?
I'm curious to see if it means the same thing to me as it does to you. To me it means GOLD. Or at least something tangible that has no counter-party risk.
Since we are talking about the verbal use of the word 'hedge', the real definition would be 'a risk that cannot be hedged against'.
So to me a 'Zero Hedge' event is an event for which there is no hedge.
Question. If China's our largest creditor and they're in the shitter, is there a chance they can start redeeming the notes they hold to weather their storm?
I don't think its a question of redeeming, to my way of thinking, it's more of a question of who continues buying US debt? If China needs to use its liquidity to soak up a housing rout, the #1 buyer of US debt is on the sidelines. Prices will go up, and then things start getting ugly.
The FED is the largest buyer of US debt recently
I think Japan is now...how they do it I don´t know.....but they do
QUESTION: if the auction was so poor (which I agree, it was), then why did that mark the low of the day, after which the 5 year continued to rally all day? Bad news => up for equities much of the time, of course. But I thought the bond market was much more... reasonable. Thoughts?