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Blistering Demand For 30 Year Treasury Paper
If yesterday's 10 Year reopening was a ho-hum auction with no surprises, today's surging stock market has translated into blistering demand for 30 Year US government paper, when moments ago the Treasury sold $13 billion in the RC4 reopening of 29-Year 10-Months, at a yield of 3.758 (with 78.4% allotted at the high), nearly a stunning 3 bps through the 3.781% When Issued, which has led to the long end ripping tighter following the news. The internals were quite as impressive: The Bid To Cover of 2.64 was the highest since February and well above the TTM average of 2.51, Directs were awarded a whopping 22.6%, the most since June 2012, Indirects got 41.9% - the most since March, while Dealers were stuck holding just 35.5%, or the least since August 2010 as seemingly everyone else wanted a piece of this auction first. So why are bonds and stock surging at the same time? Either there is a major short-covering relief rally across all asset classes as the government may not be defaulting in one week, or just the amount of pent up liquidity as a result of the ongoing Fed monetizations is so desperate to find a place to go, it will jump even into conflicting asset classes.
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Well... not ALL asset classes. PMs continue to tread water.
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when this all goes kablooeebukkakee, what's in your wallet?
Wow, look at that confidence in the totally manipulated markets! WE'RE FREAKING AWESOME!
GO TEAM FIAT!!
The Fed is not trying to control a $17 T treasury market - $5 T is intragov debt that always gets rolled over so no worries there - down to $12 T - the Fed owns none of the $7 T Bill market - so now the Fed only has to focus on the $4 T Notes / Bonds (TIPS) market...of which they now own over $2.2 Trillion or something like 55% (they are buying Notes / Bonds @ about 150% of their issuance)...so they buy all new plus all rollover. They will own 70% (their mandated limit) of all Notes / Bonds issued within a year @ current QE and Treasury debt issuance.
Did I mention there is no market but the Fed???
by the by - this means pretty much all $5 T of foreign held Treasuries are in Bills...standing right next to the exit.
wow.. and what's amazing, is it's all being done with a straight face.. LMAO creating the money to buy the debt... And nobody cares.. it doesn't get any more.. well I can't think of a word..
Exactamundo, Sir Richmond, exactamundo!
For the answer to, "So why are bonds and stock surging at the same time?"
one would have to hack into elxfutures.com for the real answer.....
Ah, if only. When PM's tread water; it's a stable world. They're treading water upwards as the "currencies" devalue. A year is nothing in the PM market.
Short covering.
Wrong answer. Irrational enthusiasm in the case of the Stock Market; serious professional conservatism in the case of the Long Bond.
Great news for the Bernanke. Time to taper stealthily.
Only natural, as they can't be printed like gold.
"just the amount of pent up liquidity as a result of the ongoing Fed monetizations is so desperate to find a place to go, it will jump even into conflicting asset classes."
It's that.
Everyone is snapping up everything in credit today. Buyers everywhere.
Does that include Puerto Rican munis?
For the right price, yes.
fidelity vs pimPco
Taper = Never
Asset Bubble = Great!
Wealth Effect = Politicians for sale
Yes, because 30 year is backed by the full faith and credit of the US govt. Cough.
Given the two choices of rancid equities or a toxic 30 year....I will take the 30 year in this enviro.
That's the beauty of getting free money from the fed, you may as well just take both.
I can only take one poison at a time.
There was no third choice for FX unfortunately.
You get free money from the fed? Damn you!
Offer me free sex with a 500 pound chick and I will turn that down as well.
450...maybe...with a lot of beer.
slap her thigh and ride the wave in?
Blank checks and free money for everyone forever!
The greatest casino in history. Throw money everywhere, at everything. NO BUBBLE. No losing. Everything backed by full faith and credit. Power is now consolidated down to 12 Fed puppets on a string.
And King Dollar reigns because everything else is utter garbage.
A world that is a true wonder to behold. Our "leaders" must be so proud.
If this shit continues for another 8 or 10 years it's going to start to suck being a gold bug.
Give it another year and half the gold bugs on here will be buying the SPY.
>> Give it another year
It would probably be a prudent move. Once again, the old adage about "don't fight the fed" has proven to be prophetic. If I hadn't learned long ago that every investment decision I make is the wrong move at the wrong time I'd cash in and go main stream.
It's never too late to go mainstream.
If you haven't noticed whose really in charge and how all you have to do is what they tell you to do (by words and policy) let me be the first to clue you in. You might not make another investment mistake for the next 10 years.
For further backround reading please watch the "Buy The Fucking Dip" animation reposted here and elsewhere from time to time.
Just need to pick the 'winners' like: jcp, YUM brands, lucent, and so on....if you're not an insider, it can be a tough slog in equities...easy to get 100% wiped out.
When the CEO of Northwestern Mutual Ins Co was asked why the most conservative ins co in America bought gold he said, "Because gold never goes to zero."
I doesn't already?
30 yr yield coming down?
Could it be that we could see a partially Inverted Yield Curve in our near future?
The average maturity of US government debt has increased from a low of 46 months to about 72 months. This article is a little old but has an interesting chart.
http://www.treasury.gov/connect/blog/Pages/Chart-of-the-Day-Lengthening-the-Average-Maturity-of-Outstanding-Treasury-Securities-.aspx
The treasury is selling long term debt as fast as it can. During the Clinton administration sales of long term debt were mostly replaced with short term ( cheaper ) notes.
The government is locking in low long term rates to give it the flexabilty to raise rates in the future. Pay no attention to what tools like Yellen say, pay attention to what they DO. Once the debt slaves are put in chains the rates will go WAY up. People aren't being put into debt just to liberate them by hyperinflation.
knob, you could be on to something. I notce realtors in my area telling people to sell now before prices fall with rate increases. No wonder there are 14 new For Sale signs up last Monday.
I'd still rather pay a lower price with higher rate...then the opposite.
Credit History w Tuning Interference
From labor perspective, the empire is background noise, largely to be tuned out. Your person is the adjustment. To the extent you require gravity, let the empire see you, with a public profile built for the purpose. The wave is a derivative of a rocking lever on a rotating fulcrum. What is the difference between a photon and an electron? What does the perception of speed have to do with mass?
If you look at your History book, pick your poison, the empire operates on the assumption of transformational leaders, scapegoats in linear time. If you remove those monochromatic lenses, you will see otherwise. Funny, how swapping the leader of the parade does not alter its direction or momentum. In war, the clothes come off, you see the depravity of empire group competition and the self-reliance escaping it, through implicit cooperation. An empire is a distillery.
Don’t ignore the nature of gravity that the armature is resting upon to feed the circuit. What is the character of credit issuance? What is the feedback?
“World War I was over, America’s industrial might was coming of age with the rise of the auto industry and the nascent communications industry, Wall Street was booming…”
“…the landscape was changing rapidly, from agrarian to urban…”
“Prohibition was beginning, but so was the roaring lifestyle that came from flouting of Prohibition and the culture that produced it.”
“Roosevelt, elected to his [THIRD] term, again by a landslide, was preparing the United States, pushing through the Export Control Act to stop the shipment of war materials overseas.”
“...by 1944, twelve million Americans were in uniform; war production represented 44 percent of Gross National Product; there was almost nineteen million more workers than there had been five years earlier…”
“...counseling sightless veterans on the career possibilities in insurance, mortgage sales, and car financing…”
“They helped convert a wartime economy into the most powerful peacetime economy in history…”
(Brokaw, The Greatest Generation)
…a perpetual war machine in a positive feedback loop with Wall Street false promises, money with nowhere to go but stupid. That is Main Street America blaming Wall Street for its own participation in credit misdirection, liar’s poker with a stacked deck. What do you expect Yellen to do?
You have artificial real estate scarcity and price inflation on one side of the fulcrum, and artificial empire labor excess and price deflation on the other. Yellen has no idea what you are going to do next, unless you choose to be an empire robot and validate her equations, which you may or may not want to do depending upon your development.
To the extent your idea of fun is related to empire money, depression is the only possible outcome, because empires seek what they cannot have and disregard what they do have, with increasing speed. Nature is the problem and the solution. Don’t embed empire real estate prices into your food and expect a happy outcome. Sooner or later, you get run over by the wheel of your own creation.
The empire pays you to be stupid; tune it out.
http://www.treasury.gov/initiatives/pages/debtlimit.aspx
Debt Limit
The debt limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.
Failing to increase the debt limit would have catastrophic economic consequences. It would cause the government to default on its legal obligations – an unprecedented event in American history. That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans – putting the United States right back in a deep economic hole, just as the country is recovering from the recent recession.
Congress has always acted when called upon to raise the debt limit. Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents. In the coming weeks, Congress must act to increase the debt limit. Congressional leaders in both parties have recognized that this is necessary. Recently, however, a number of myths about this issue have begun to surface.
Re; 49 times under Republican presidents and 29 times under Democratic presidents
Show of hands of how many people are soaking up EEEE-VILE socialist Big-Gov loot from their favorite Big-Gov socialist scam?
Duplicity, ask for it by name!
Are we sure this isn't just the FED and it's proxies creating faux confidence in the dysfunctional government due the debt ceiling thingie going on to keep investors aka the world from getting spooked. Bullshit, smoke and mirrors is all the rage these days.
The reporting you did elsewhere here on the bank deposits versus loans is deflationary; there is significant risk of a giant contagious debt instrument crash; many heavy duty financial managers are taking the Mark Twain position; "I'm not concerned with the return on my money, but the return of my money". The unique status of the US Long Term is that you will get your dollars back. There are long lists of financial investments and paper deals that all have a significant risk of dying to the untimely death of the counter-party. As the smoke and mirrors in the Euro Market clear up marginally, and the last desperate hold on in Tokyo Commercial Real Estate gives up, there's a steady flow of "mark Twainers" into US Long Terms.