Panic: 1 Month Bill Yield Explodes, Prices At 0.35% Highest Since Lehman

Tyler Durden's picture

Moments ago, the just concluded 4 week Bill, with a Cusip which appropriately enough was BK, priced at a stunning 0.35%, blowing through the 0.295% When Issued, the highest yield since October 2009, the lowest Bid to Cover since March 2009, and the largest tail since March 25, 2008. The bond market panic is palpable, and just as we predicted would happen in a market gripped by sheer "Bernanke will kiss and make it all better" complacency.


and the 1M1Y curve grows increasingly inverted.

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Jason T's picture

that's going to blow out the deficits again.. so much for balancing budget ever again. 

EscapeKey's picture

Deficits don't matter!

Neither does debt ratios.

SWRichmond's picture

Let's see if Lew can do an imitation of Paulson's "tanks in the streets".

CClarity's picture

Sloppy ugly auction.  Will slosh lower (higher yield) and then some dealer will mop a bunch up and start jamming the shorts through repo shenanigans.  Gonna be crazy in bill trading land the rest of this month.

TheCanadianAustrian's picture

Wait a minute. This is 0.35% annualized, correct?

If true, that means that people are willing to lend the US government $10,000 for one month, and if all goes well, then one month later they expect to receive their $10,000 plus 30 dollars in interest.

In what universe does this qualify as "panic"?

How about "slightly less morbidly complacent than yesterday"?

Beam Me Up Scotty's picture

I'd rather keep my $10,000 in my matress than worry about 30 dollars return on it.  Or lose it on the bottom of the lake in the form of shiney round objects.

TheCanadianAustrian's picture

I double checked my math, and it turns out I'm wrong. It's actually 3 dollars of interest on the $10k!

Joeman34's picture

Add at least 5 0's and then you might begin to understand why this matters...

kaiserhoff's picture

It still doesn't.

I would defer to the bond and bill dudes, but the real issue seems to be COLLATERAL.

If these don't pay shit bills are in technical default, they are not good collateral for other trades,

like rules matter...

Bob Sacamano's picture

$35 of interest per YEAR for a $10,000 investment. 

But you are correct -- this "panic" is faked (fanned heavily by the left and the media - I know, same).  One month Treasury rates have averaged over 4.00% for the past 60 years.  And 0.35% is suppose to be something to panic about??   Absurd. 

There will be no default on US Treasury debt no matter if this gets resolved Oct 17th or Dec 17th.  This is a "phony crisis" as BHO likes to say.  Politicians and the news media need something to keep their viewership up.  Fanning the "default" flames is a favorite. 

They said the Aug 2011 rating downgrade would be a disaster.  The market and the economy moved higher. 

They said sequestration would be devastating.  The market and the economy moved higher (and the deficit lower). 

This is just theatrics.

Manthong's picture

Please put this on pause for about 20 minutes..

I need to run out for some more popcorn.

kaiserhoff's picture

.35 %  annualized.

Wake me when they hit 1% per month.

walküre's picture

.35% annualized = 4.2% p.a. when 10 yr debt is barely 3% p.a.

Houston we have a problem!


kaiserhoff's picture

See the correct math above,


walküre's picture

I guess water runs upstream in the Rockies and the Alps. Yodeleeeeeeooooooooooooo

kaiserhoff's picture

It's confusing because the rates are quoted as annualized.

If we really had 4% short rates, I'd be back in the arbitrage business big time. 

We'll get there, and then some.


Arius's picture

but...but ... Goldman just advised on the Slam Dunk ... LOL

the crooks are leaving town ...

J Pancreas's picture

Only two slugs matter in this race:


The Bernank and Yellen's Slophole

Millivanilli's picture

Yields rock!  SUCK IT BERNANK!

One And Only's picture

Get to work Mr chairman

McMolotov's picture

It's "Mr. Charmin," like the stuff he prints.

Renewable Life's picture

The stock market though...............still in the stratosphere with George Clooney and Sandra Bullock!

But you know what they say about Gravity, (besides its a pretty good movie now) it's a bitch, when it kicks in!

J Pancreas's picture

Wonder when the equity market mongoloid algos are going to follow suit?

Skateboarder's picture

Look for the telltale sign of bid > ask.

Seasmoke's picture

HA ! Poor Ben just can't catch a break. 

eatthebanksters's picture

He shouldn't be getting a break...he should force congress to do something

John McCloy's picture

Do your thing FAZ

BoNeSxxx's picture

Ugh,... you just had to go there... FAZ is like my crack cocaine... we have a long relationship and it has been very good to me... And it has curb-stomped the shit out of me.

I nearly took a big position on Friday.  Didn't.

Nearly did it again yesterday... Didn't.

Saw your post - took it as a sign from God himeself - today.  DID.

Help me I am sick and I need help. :-)

world_debt_slave's picture

here we go again, and again, and again

youngman's picture

Obviously they are going to have to raise the rates for Obamacare to cover this....make em pay more....for less...more debt...less income...a good business model....

SpanishGoop's picture

Looks like Europe's business model.


Jethro's picture

What do y'all reckon? Another week of speculative panic if no political "solution" is reached? Then, after the 17th real panic sets in if no "agreement" is made?

The algos will just do what they are programmed to do. So I don't see the equity market tanking right away. On that note, what is to prevent the PPT and Fed from doing something on an unprecedented scale if real people sell off, and just leaving the algos to play?

yogibear's picture

The republicans fold again and Boner starts crying soon.

It will embolden King Obama even more.

It's spend and print until the US dollar dies. Be prepared.

Bold Eagle's picture

It's different this time! Not...

eatthebanksters's picture

Well at least we're going to find out who the true sociopaths are in Washington, just look for the ones that aren't sweating...

vote_libertarian_party's picture

Politicians to cave in 3..2..

sudzee's picture

I think everyone should go out and pick up some of those new 100's that cost 16 cents to make.

NOTaREALmerican's picture

Hey,  was that a 1 Trillion dollar coin that just rolled by?

balanced's picture

Why isn't Ben just buying the 1-month bills? Is this intentional just to scare the Republicans into making a deal, or is this really happening outside of the control of the FED?

Ham-bone's picture

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 debt (Notes, Bonds, TIPS) is $4T and obviously rolling much slower.  If Ben starts buying Bills...they will all be sold to him in short order... $45 Billion a month in QE won't come close to covering that.  Ben's gonna need a much bigger boat...

Kirk2NCC1701's picture

Well, it's a good thing the Fed is coming out with brand New & Improved $100 FRNs (today).

Markets will rally on this news, right?  ;-)

Catullus's picture

Evil speculators not buying our debt!!! How dare they?! We need a windfall profits tax. Tax the bonuses.Tobin tax the shit out of this. Do something!!! Agghhhh!! Sick Steve Ratner on them.

Breaking the buck in 4...3...2...

FranSix's picture

Higher yields on short-term bills while markets are declining can only mean preparation for an expansion of QE, not a harbinger of default or a failure in the bond markets.

By any rights, yields should be nominal negative, or will be.

Fix It Again Timmy's picture

At .35% your money will double in a mere 198 years!  What are you waiting for folks?  Pile in and reap the harvest....

22winmag's picture

Laugh now doc, 'til he guts you like a fish.

Fix It Again Timmy's picture

If you can print your money, the secret is..."you don't have to wait 198 years for your money to double"...A discrepancy the American public is totally ignorant of while they wait 198 years for their money to double....