Primary Dealer Bill Holdings Plunge To 2013 Lows

Tyler Durden's picture

While one after another money market fund quietly announces they are liquidating "cash equivalent" Bill holdings, be they the mid/late October vintage or, now that a can kicking negotiation is in process, the Bills in close proximity to the Thanksgiving day 6 week extension period, over buck breaking concerns that the debt ceiling extension may be snagged due to political manoeuvering, someone was once again ahead of the curve. That someone are the 20 Primary Dealers, which as the NY Fed reports, sold out of the bulk of their Bill holdings in the last two weeks of September in the process taking their Bill holdings to the lowest in all of 2013. The last time Dealers sold off near-term Treasurys with such gusto: July 13 of 2011, just before the last debt ceiling extension fiasco, when Bill holdings dropped to a net negative ($10) billion position.

So if indeed the debt ceiling can kicking is set to become a periodic, 6-week exercise, will Dealers simply shun Bills going forward as an asset class due to "political" risk? And if so, what happens to Money Market funds, whose investment choices unlike those of the Dealers, are far more limited? If the answer is yes, then the already pronounced scarcity of "high quality collateral" is set to be slashed even more as an entire subset of Bills becomes increasingly "risky."

Source: NY Fed

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Ancona's picture

Fuck these parasites.


And Fuck you Bernanke.

Kitler's picture

That's an extremely anti-parasemitic statement

Scarlett's picture

IMF saying "how about robbing 10% of everyone's bank accounts?" in plain sight. (p.47)

Newsboy's picture

I'm sure not holding any.

NoDebt's picture

I used to worry that MAYBE policy-makers/politicians would somehow, through an act of stupidity and quite accidentally, BREAK something somewhere down deep in the world's already weakened financial system.  Something not immediately apparent.  But within a few days or weeks something that would start another 2008-style chain of dominoes tumbling down.

I don't worry about that any more.  Which is why I don't worry about stories like this.

NotApplicable's picture

Puppets don't break anything they aren't told to. If it appears otherwise, then they've been setup as the fall guys/gals (ala "Tea Party"), as they weren't very dependable puppets in the first place.

fonzannoon's picture

if the 1 month yield was 15% and we had auctions coming up next week this would be more interesting.

Tsar Pointless's picture


S&P 1700 again, bitchez.

That will be plastered all over the nightly news broadcasts, displayed prominently.

All is well, Amerikkkans. Go back to watching football.

Seal's picture

and after this it's only  change to the definition of "subset"

Haager's picture

And now, after everyone has been told about that, we can expect the table to be shifted, right?