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Anticlimatic 3 Year Auction Follows Explosive 4 Week Bill Issuance
Following today's explosive 4 Week Bill auction which priced at the highest yield since October 2008, the subsequent $30 billion 3 Year auction was rather anticlimatic. While the WI had been rising modestly all day, the final high yield of 0.71% was through the When Issued 0.719%, which was also the lowest since August, following the pre-Taper fears blow out in short-term yields in September when it priced at 0.913%. Still, the Bid To Cover was hardly anything to write home about, which at 3.048 was the lowest since June and higher only than the 2.946 from June, going back all the way late 2010. The ongoing decline in Bids to Cover is very obvious in the chart below.
The internals indicated a modest increase in Indirect Bidders, which took down 34.4% of the auction, compared to the 28% TTM average, leaving 19.7% to the Directs, in line with the trailing twelve month average, and 45.8% to Dealers, below the 52.7% TTM average. Overall, the fear in the bond market continues to be confined to the ultra-short term bonds, where fears of a technical default in the next month is all focused on the next month, but for now is confined solely there.
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It's solely confined there because this drama is solely confined to kabuki theatre.
It's more pathetic than funny.
1 month and short term Bill market is way too big for Ben to have significant impact - this is a $7T public outstanding market vs. all 1yr and greater public outstanding debt (Notes, Bonds, TIPS) is $4T and obviously rolling much slower.
Everybody knows eventually Ben will buy all Notes / Bonds via QE (up to the 70% limit of each issuance) so there is no risk here..but the short end is now where the true risk is as there is no way Ben's $45 Billion QE a month can have any impact in the Bill market...this is where all foreign held Treasury debt is and a simple act of not rolling could get disorderly fast
BTW - Ben already owns $2.2 T of available $4 T in all 1yr and longer dated Treasury debt - He owns virtually nothing of the $7 T short term debt
Your telling me they roll 7 T annually?
Wow... rise in rates would have a huge impact.... USD is toast. The question is, when, and what replaces it?
Two words: Gold, bitchez.
Then Chairman Ben ought to get his helicopter a-whirlin' tout-de-suite and drop some trillion-dollar coins on the short-term Treasury market.
<--- T-market telling us everything is fine after 3 years.
<--- T-market telling us that in 3 years none of this shit is going to matter.
<-----there is no treasury market
<-----there is only the Bernank
Noboby beleives anymore anyhow! It's broken.
The big money is in need of short term bills, since they are going to cash.
Audit the FED.
All they gonna show those auditors will be their toilets - probably made of German gold reserves.
I guess it can just go on like this forever.
Yes and no - if the Fed needs to get involved in the Bill market to avoid a sharp turn up in rates...the Fed will need to double, triple, or quadruple QE to have any impact due to the much larger size of the Bill market. So, can continue but somebodies gonna have to sign off on the massive increase in QE which may have some outsized impacts in dollar / PM's / Commodities, etc. (ie, someone may notice that a hyperinflation of the currency is under way)
wasn't the complaint on savers just yesterday? who needs overnight credit in this economy anyways. the only booms are in North Dakota and Texas...meh.
Is this auction somehow negating global warming? Being "anticlimatic" sounds like it runs in the face of climate change. It looked more "anticlimactic" to me.
Beat me to it. Geez, we learned this in HS English back in the day, public school even!
Climatic: of or relating to climate.
Climactic: of, relating to, or constituting a climax.
I guess US adults are really dumber than the average human http://nypost.com/2013/10/08/us-adults-are-dumber-than-the-average-human/