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30 Year Squeezes By With Lowest Bid To Cover Since August 2011

Tyler Durden's picture




 

This week's final auction is over, in the form of a $13 billion 30 Year reopening, which like the previous 3 and 10 Years, was "good enough" but certainly nothing to write home about. The final yield of 3.660% stopped through the When Issued by 1 basis point so the market was mispricing the demand in the minutes leading up to the sale, however, the Bid to Cover of just 2.26 showed that not all was well under the sun - this was the lower BTC since August 2011, or the "debt ceiling" auction, and lower than both last month's 2.47 and the LTM average 2.57. The internals were in line with Indirects allotted 40.2%, Direct take down doubling from 8.5% to 16.3% and Dealers allocation dropping from 51.3% to 43.4%. Finally, following the past two auctions, the collateral squeeze in the bond market appears to have eased a bit on the short end with the 3 Year trading -0.02% down from -0.55% yesterday, although the 10 Year squeeze continuing still and trading special-er at -0.40% compared to -0.30% yesterday. How long until the Fed monetize all the Dealer allocated $5.6 billion in future POMOs? Keep an eye out on Cusip 912810RB6 in futures 30 year POMOs to see how much of this bond is promptly flipped back to the Fed.

 

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Thu, 07/11/2013 - 13:19 | 3742002 fightthepower
fightthepower's picture

Fuck you Bernanke!

Thu, 07/11/2013 - 13:35 | 3742041 Dareconomics
Dareconomics's picture

Those 30 year rates will rise, and it seems that almost everybody knows it. 

http://dareconomics.wordpress.com/2013/07/11/around-the-globe-07-11-2013/

Thu, 07/11/2013 - 13:19 | 3742003 dcj98gst
dcj98gst's picture

Shocker

Thu, 07/11/2013 - 13:20 | 3742005 Debeachesand Je...
Debeachesand Jerseyshores's picture

!!!!!! Enough said.

Thu, 07/11/2013 - 13:24 | 3742012 Gringo Viejo
Gringo Viejo's picture

Paper is Paper. If ANYTHING has been shown to me over the past 5 years is that if it isn't in your physical possession, you only own it in theory.

Thu, 07/11/2013 - 13:25 | 3742015 Spitzer
Spitzer's picture

 

They were talking about supply and demand on CNBS today. I lol'd

Thu, 07/11/2013 - 14:19 | 3742089 Solon the Destroyer
Solon the Destroyer's picture

How one can look at a 30 year bond priced at 3.66% and not think there is something terribly terribly wrong with the financial world is beyond me.

Such little yield forces investors to leverage adding ever more risk and instability to the system.

Bond prices have what...doubled 5 times since 1980?  Following the pattern of that bribe to bond buyers, expect to see this yield under 2% by 2016...  If they can keep the "Good Ship Fiat" above water that long.

And if the 30 year is below 2%, Gold will be the star of the party.

Theoretically, you can halve yields indefinitely.  That is, the Fed can continue the bribe of capital gains to bondholders indefinitely. And the recent actions of leveraged holders selling their positions shows us that the vigilantes DEMAND the bribe be continued.  That means there is no escape for the Fed. 

The only problem in that scenario is Gold will be exposing the Ponzi every step of the way. They can hide the Fed's balance sheet from the public. They cannot hide the price of gold from the public except in the illusory short term.

Thu, 07/11/2013 - 14:19 | 3742209 gjp
gjp's picture

They seem to be doing a fine job of hiding the price of gold in recent years ...

FWIW, since 1982, total return on bonds was around 20x and on stocks was 25x.  While average real wages were basically flat.  Can you say financially engineered wealth transfer?  Feudal lords are looking on in envy (from hell).

Thu, 07/11/2013 - 14:36 | 3742267 Solon the Destroyer
Solon the Destroyer's picture

Considering Gold's inexorable rise since the 90s, I'd say they're doing a piss poor job. This drop this year will prove to be transitory.

Thu, 07/11/2013 - 15:18 | 3742435 flow5
flow5's picture

Wealth transfer?  Consider that the composition of savings has changed dramatically:

Subtracting those balances > $100,000 + IRAs & Keoghs from total time deposits = small accounts.

In 1/1998 total time deposits were .48% of m2.  Small time deposits were .33% of m2. 

Today total time deposits are .85% of m2. Small time deposits are .07% of m2.

Thu, 07/11/2013 - 14:16 | 3742193 assistedliving
assistedliving's picture

the thing i'm trying to get my arms around (as in HELP!!!)

bond prices

china 1.4B

india 1.3B

the greatest 'transfer' of wealth from the great generation to like, US

and then trying to Tepperize it all.  i keep coming up PM's and have been losing ever since...HELP

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