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Fidelity Sells All Debt-Ceiling Maturing Treasuries Despite Blogosphere's "All Clear" Call
Many market-watching prognosticators have dismissed the spike in T-Bill rates on the basis of "well it's only a few pennies, why worry..." missing entirely the 50-100x leverage in TRS and the almost inifinite rehypothecation risk implicit in a missed payment (even if temporary). It seems, despite these views, Fidelity Investments - the largest manager of money-market mutual funds - said, according to AP, that it no longer holds any US government debt maturing around the time of the nation could hit ist borrowing limit. Action - it would seem - speaks louder than words.
Via AP,
The nation's largest manager of money market mutual funds said Wednesday that it no longer holds any U.S. government debt that comes due around the time the nation could hit its borrowing limit.
Portfolio managers at Fidelity Investments have been selling off their government debt holdings over the last couple of weeks, said Nancy Prior, president of Fidelity's Money Market Group. While Fidelity expects the debt ceiling issue to be resolved, the Boston-based asset manager said it is taking steps to protect investors.
Prior said that Fidelity no longer holds any U.S. debt that comes due in late October or early November, the window considered by many investors to be the most exposed if the government runs out of money and defaults on its obligations.
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This has surely rasied the ire of the NSA. How very unpatriotic.
Yup, here comes the FED
I think you mean IRS.
No wait, he's talking about the SEC.
Not quite there.. I'm sure it's the YMCA.
Well, the guy just "interviewed" on CNBC made it pretty clear that he would prefer US default to any more irresponsible spending, though he doesn't want either. But matter his of priorities.
Btw, he is Rep. Mo Brooks of Alabama. A Mo that doesn't want MOAR!
It's just a mir $488 billion, no big deal, nothing to see here, move along folks.
Don't panic, Joe, but go ahead and SELL EVERYTHING!
Dive! Dive! Dive!
http://www.youtube.com/watch?v=07P0mXOjKBk (klaxon sound - 3 sec.)
Nah...it's the Village People...singing about the YMCA...everything's a derivative these days...
Nah, it's Michelle with her shopping bag.
Probably all three..Fed to buy the Treasuries, SEC/FINRA to investigate any wrong doings over the years, and the IRS to make sure their taxes are in order.
Moody's says it doesn't matter. Debt Servicing will happen whether the debt ceiling is raised or not
http://www.washingtonpost.com/blogs/post-politics-live/liveblog/live-updates-the-shutdown-4/?hpid=z2#c1e3ada3-dc00-41d8-92cb-327c5c814d82
Here is something else I read yesterday. Apparently the social security administration is running a 2.7 Trillion Surplus.
http://money.msn.com/business-news/article.aspx?feed=OBR&date=20131008&id=16978081
Moody's is wrong.
Moody's say whatever the bankers tell them too. - fixed.
Moody's says whatever WARREN BUFETT tells them to say. Fixed again. :)
@King
That BSMSN article about the Social Security Trust Fund is so ridiculously written that I could swear it was written by MillionDollarBonus!
From the article: "Social Security currently has a surplus of $2.7 trillion. This year it is on track to take in $38.8 billion more in revenue than it will pay out, according to the forecast of the program's trustees. These funds sit in something called the Social Security Trust Fund (SSTF).
While SSTF funds can be used only for Social Security, the fund operates in a way that could leave it vulnerable in the event of a government default.
Every dollar of Social Security payroll tax revenue received by the U.S. Treasury Department is used to fund general operations. Treasury then turns around and issues special interest-bearing Treasury notes to the SSTF matching the amount of payroll taxes it has received (and spent).
To fund benefit payments every month, the Social Security Administration redeems bonds from the SSTF with the shortest maturity, receiving principal plus interest. The government finances Social Security redemptions by issuing new general-issue Treasury bonds. This is the nub of a key right-wing critique of Social Security - namely, that it's a Ponzi scheme, and that it has no real assets. Nothing could be further from the truth.
The reality: The SSTF actually is one of the largest creditors of the U.S. Treasury - right up there with China and Japan, which together hold $2.4 trillion in Treasury debt. The system was designed this way to ensure that Social Security would be invested only in the world's - ahem - safest instrument: paper issued by the U.S. Treasury.
The special-issue Treasury notes are backed by the full faith and credit of the U.S. government, and the system works fine when the Treasury has the power to issue debt to fund Social Security's bond redemptions. Even if the government hits the debt ceiling, there's a viable option for keeping Social Security benefits flowing without affecting the federal debt situation in any meaningful way."
LOL!!!
Gave you a thumbs up, but just have to comment on the man's article. THE AUTHOR SHOULD BE DISMISSED AS AN IDIOT! He doesn't understand how it works, even though he explained it in plain English. ALL SOCIAL SECURITY RECEIPTS GO TO THE GENERAL FUND! Plain and simple. Every time the general fund gives Soc Sec the cash to make the payments, they have to borrow from the public. They are transferring debt held by an intergovernmental agency to debt held by the public. And it bears interest. And this process will accelerate as the "2.7 Trillion Trust Fund" goes down. IT IS NOT A TRUST FUND! It is money spent to reduce reported annual deficits for general spending. And it is beginning to hit he balance sheet as interest bearing debt held by the public. And without reform of entitlements, it will bury this country and its taxpayers.
Surplus? Not for long.
How is that even possible?
It's in a lock box.
It's in a "You are outalock box." The secret password to put money in is "Sucker". The password to get money out does not exist.
Nope, the Fed. Who do you think is buying all this crap!
1 week until SD time baby...bring it on!!!!!
Look, english words are supposed to have meanings.
"Default" means debt instruments are not serviced. Now I guess you mean selective default in that programs are not funded. That's not default, selective or otherwise. That's just killing programs.
Debt instruments will be serviced -- no default. Debt instruments are not serviced -- default. That choice will be, oddly, Treasury's. It IS conceivable that the political phrasing can come into play, like:
"I am not going to embrace pay-China-first! We will pay our hungry people food stamps before we will service debt owed to China!!"
Now THAT would be "default", but if it's only China, it's "selective default".
Your forgetting the last scenario not considered by a rational market or President who obeys the rule of law:
What if our DIC(k) (Dictator in Chief, mmmok) decides to ORDER the Treasury to miss an interest payment say on a FNMA instrument.....so he can invoke some of the darker powers buried in Dodd-Frank and within the Fed's new powers.
How many billions in UST's does Al Qaeda hold that are coming due? Right. None.
See?... no lengthy trials required here... they're obviously total fucking terrorists.
Fido says Woof! to the debt ceiling debate.
With a rebel Yell,
She cried Moar Moar Moar
So Fidelity bought them all as zero-coupon paper and sold them to yield 30bps and are bragging about it? Genius.
compare it to tomorrow's price or better yet next week's price ...
Why even worry about the money market paper when they have dollar duration exposure that's probably in the trillions?
I wonder who bought them?
dealers
the Fed? Joe sixpack got deep pockets ... lol
I did. (Bitchez!)
I rather enjoy these times when everyone is running around freaking out. I'm not losing my head just because others lose theirs. If I'm wrong about this, it won't matter- you'll all be going down with me sooner or later.
Besides, what are you worried about if you really believe the banks are in charge of everything? They couldn't survive a collapse in the Treasury market- none of them. Do you think they are going to cut their own throats?
banks in charge is a rather broad term ... a few people in charge seems to be more like it .... for the sake of argument let just say as it happens they skipped town ... then what? just asking ... no worries here either, no skin in the game, whatever is meant to be it will be ....
Cen they do that? even against Goldman's recommendation?
I am shocked!
Ned and Abby are not Goldmans.
Irrelevant, Fed could print if it came to it. There will be no default. More interesting is the huge amount of new bonds due beyween now and February. Who is going to do the buying and how much interest will they require for the risk?
"..........if the government runs out of money and defaults on its obligations."
It never ceases to amaze me how clueless some so called "financial reporters" are to the basics of money and finance.
CD - you kind of suprise me ... of course, they have to be clueless ... otherwise, if they read ZH have opinions god forbid then what everyone will write what they think? common you know better than that ... newspaper reporters are the newspaper version of Joe Kernen ...plain stupid, good enough to read the lines in the telepropter and vicious to keep their jobs .... thats all
or they got to be corrupted Hilserath version but they are expensive. usually they go for the cheap idotic version ...
Sign on a man walking with a 1930's style sandwich board going up and down the sidewalk in front of the Fed. "Get your T-Bills here! Fresh T-Bills for Sale! All Federal Reserve Notes Still Accepted"
"Get your T-Bills here!...They just fell off the truck....Fresh!"
Not to mention, if the Fed won't pay the principal on Fed funds and 3-month bills, the Fed funds and t-bills are going to be the absolutely LEAST of their problems.
time to worry ... isnt it?
Not quite yet. Start worrying when the masses realize they've been fleeced....
by that time there wont be anything to save, just keep your head low it happens all the time ...
however, now there might be some life boats still left depending on the personal situation
If this was not so pathetic it might be funny.
Fidelity will allow .gov to throw a Bail-in very soon...watch
I wish Chinese pull the trigger on this shht as well.
Oddly Fidelity has called two days in a row to discuss the cash held in my account and wondering why I'm not fully invested. They haven't called in 5 years now suddenly two consecutive days in a row. Hmmmm.....
Don't even get me started about how much I hate Fidelity... I will never forget the mass conference call they had at my office, right before the shit hit the fan in 2008... Now is not the time to think in the short term, now is not the time to think about market timing. Keep your money in, for the long term, for the children. From that moment on, I use their email and phone calls as sell signs.
Now that I stop and look, there are 3 invitations to online seminars in my trash. F*ck, I will tell myself they mean well.
You were not in cash---- you were in Money market funds yielding squat. Fidelity's announcement stated they are selling short-term government securities and remaining in cash. I wonder what they mean " in cash" since you or I can not literally be in cash with Fidelity. Am I missing something?
No I understand I was not literally in cash but the Fidelity money market fund. The point I guess is that with my inactivity in the last year, either A. they were so concerned about my missing out on market returns "opportunity cost" by not buying and selling or B. They miss the fees I had generated for them in the past by actively trading. Hmmmmm....... I wonder what their underlying concern was. I'm sure it's all about my retirement well being. Had to have a long discussion with the guy about why I didn't think it was the right time to start buying equities with the markets being at all time highs I thought it was more prudent to do nothing as opposed to doing something because conventional wisdom says you must be in 80% stocks and 20% bonds or some shit like that.
I went on to tell explain I didn't feel I had any opportunity cost as it's not as if I have access to that money. The bottom line was how much money did I have in 25 years, not next year or the year after so sitting out and doing nothing isn't necessarily hurting me in my opinion.
Actually had the nerve to try and inquire about how much total monies I had and where they were located and how I would be better served by Fidelity if I had most of it with them.
Had similar experience with Fidelity in effort to transfer cash to more bond funds and equities --- no longer pushing mutual funds. My reply was if I can cover my expenses ,no need to take risk at market highs and economy at stall speed. Most Fidelity reps are disgruntled because their pension contribution plans have been cut and have pressure to produce.
Withdraw it now. Take the hit, early withdrawal penalty if an IRA. Bring it home, in your physical possession..
I've threatened to do that for 2 years. I was fortunate that back in 2006 I had liquidated 95% of all equity holdings, 401k, IRA etc before the shit hit the fan. Not brilliant call by my part just a "victim" of circumstance. The end result was that I felt very freakin' lucky and that I would never be "fully" invested again as it could've been disastrous. I would never own assets that either all moved up or down. I needed cash and levers and other assets like gold and silver. Again more luck buying at those prices than anything else. But in the end the threat to liquidate has remained hollow. I keep telling my old school CPA that's what I want to do but he keeps telling me I can't afford to do it and does not support such a move. I suppose if I had a real plan as to what to do with it once I liquidated I might be more inclined but there is only so much I feel comfortable keeping under the matresses, so to speak. I hate doing something just to do it without a solid notion of what to do next.
Just look at what is more likely: will the money vaporize in their hands, or will it vaporize in YOUR hands? Once you think about it that way the next action is clear. One of these outcomes with the wrong choice will lead to serious losses.
LOL - I would have replied "in the hull of the SS Zerohedge. I believe it's making the rounds over the Mariana Trench about now"
I get calls from mortgage lenders and real estate agents out of the blue.
"Hi is this Mr. ______"
"Who's calling please?"
"This is Greg Fucktard of Lyingbastards mortgage company...."
“Moody’s… says that if Congress does not raise the debt ceiling by Oct. 17, the nation wouldn’t actually be at risk of default. That’s because the Treasury would still have plenty of revenue to pay interest to owners of U.S. government bonds.” -- October 9,
http://www.washingtonpost.com/business/economy/when-is-a-default-a-default/2013/10/09/33cff600-3104-11e3-8627-c5d7de0a046b_story.html
What does it tell you that this is being reported over and over again and that across the board, every financial analyst out there says the chance of a default is less than 5% ...
There is no panic in the streets and apparently not many people outside of DC or Wall Street are too interested either.
If there was no chance of a default, the media would drive panic and paint the worst possible pictures of a defaulting United States knowing full well that it won't happen anyway but its fear and fear sells.
Expect the opposite because nobody is reporting that it will happen which is why it must happen and they know it.
Sorry if I lost you. It's hard to think in their perverted truth where lies are reported as facts and reverse logic applies.
I disagree, If it was known that a complete collapse was in progress, the media, like the band on the titanic, would play on.
No one profits on mass panic.
By the time it becomes 'public' knowledge, the little people willl already be well and truly f- cked.
A woman without a credit limit. Nice!
Greg Hunter has a great interview with Paul Craig Roberts today.
http://usawatchdog.com/paul-craig-roberts-obama-could-govern-as-a-dictator/
Starting at around the 6 minute mark, Paul says "they (I assume he is including Obama and the Congress) don't want it to go that far (default)".
My question is,
"If Obama really is a Manchurian Candidate, like so, so many people seem to think, then why would he NOT want it to go so far as default, so that he can declare the catastrophe?"
Kudos Legolas - It will be the defining moment. As I have commented before... the military may have to get involved... just like in Indononesia.
So maybe the Monkey with a grenade knows he has the Republicans in the House by the short hairs ?
Why would he want to negotiate?
Excuse me while I go puke....
Prediction (before other blog sites or MSM say it):
The title of Federal Reserve Chairman will be changed to "Chair".
Should be but almost certainly won't. For some reason most organizations lead by women use "chairman" to label the leading office place.
According to BMO Capital Markets:
Yellen Gets The Nod….Business As Usual
Bottom Line: It should be business as usual under new Chair Janet Yellen in 2014, with the Fed focused on returning the economy to full health. When the time comes to mop up the stimulus, however, we would expect her to be as equally determined to restrain inflation as Bernanke would have been.
The President’s nomination of Vice Chair Janet Yellen as head of the Fed was widely anticipated, and there was only a muted market response. She is widely expected to pass the Senate’s confirmation hearings, allowing her to step into Bernanke’s shoes on February 1. The news removes one source of uncertainty for investors buffeted by the fiscal impasse. Though sporting dovish credentials, Yellen is considered a pragmatic policy maker with an above average record in forecasting the economy. This should come in handy during these particularly uncertain times. Brian Belski, our Chief Investment Strategist, believes the Yellen appointment will be viewed as a seamless transition, one that should provide stability to equity markets.
While Yellen hasn’t spoken publicly about policy in months, it is widely believed she is still a strong supporter of the Fed’s QE program and forward guidance. The unprecedented stimulus is aimed at keeping long-term rates down until the economy strengthens and is closer to full employment, provided that inflation doesn’t rise much above the 2% target. Like Bernanke, her near-term focus is to reduce unemployment. However, this doesn’t preclude slowing asset purchases as the economy strengthens. Assuming the fiscal impasse ends in the next couple of weeks, we still lean towards a December tapering. (Bernanke will chair one more meeting after that on January 28/29.) Still, the Fed is unlikely to stop purchasing assets until next summer and probably won’t begin raising the funds rate until the second half of 2015.
We don’t believe Yellen’s dovish reputation is entirely deserved. She led the push to establish an inflation target in 2011. Her support for aggressive stimulus in recent years was likely warranted by the economy’s lackluster performance since emerging from the Great Recession, and by the equally subdued behavior of inflation. In other words, being “dovish” in the past four years has been the same as being “right”. When the economy eventually normalizes, she will likely refocus her attention on defending both sides of the Fed’s mandate of full employment and low inflation. As a supporter of open communication and transparency, Yellen will need to “lean toward the center” as a leader, to ensure that a solid majority of the other 18 policy makers support her views. This will be especially important when the time is ripe to unwind the unprecedented stimulus, as underscored by the rout in Treasuries ahead of the September meeting amid growing expectations of a mere slowing in stimulus.
Should the fiscal impasse continue and lead to prolonged economic disruptions, the new Chair may consider different tactics to offset the shock. This might include lowering the unemployment rate threshold that would trigger a potential rate hike (currently at 6.5%), or establishing an inflation threshold that would preclude tightening so long as inflation remained below it. Although expanding the size of asset purchases (from the current $85 billion monthly rate) could also be considered, this option seems to be losing favor, even among several Governors on the Federal Open Market Committee who are worried about longer-term risks to inflation and financial stability.
As one of the few policymakers to ring the alarm bells before the 2008 financial crisis, Yellen will likely take the Fed’s expanded regulatory role to heart. The last thing she wants is a credit crisis/asset bubble under her watch.
The entire global economy is like a suckling pig dependent on the udder of the Fed----most appropriate to finally have a female Fed Chair with a motherly instinct. However, at some point Mommy has to tell the piglets to tapper and fend for themselves in the real world.
It stands to reason that the only reason said piglets are still alive is due to the mothers milk of the Fed. Your analogy fails to mention that these are Mutant piglets who will never grow up to be independant.
The Sow will eventually be sucked dry, and not even the imaginary milk she now expresses will keep them alive.
There is no real world, just a collective fear of reality
So they think stocks will be fine?
No. Might be best to focus on stock, rather than stocks.
Don't do what they say, do what they do, preferably before they do.
"Bill Gross: We're buying what Fidelity is selling"
http://finance.yahoo.com/news/bill-gross-were-buying-fidelity-202558335....
Excellent, Smithers (Gross). Best regards to your German owner. See you on the other side...
wait... you CAN'T print moar welfs? oh NOES
Don't get angry, get even is a useful mindset when faced with fraud at every level of official statistics. Fidelity saw that the upside potential was minimal compared to the downside certainty. The first out the exit usually gets to choose their own path, instead of being crushed in the stampede. Gotta love Boston ;-)