Treasury Bills Collapse

Tyler Durden's picture


As equities continue to press back towards all-time highs, the Treasury Bill market is growing increasingly uncomrtable that these "people" in DC will find a solution before the 10/17/13 bill matures (10/17/13 Bill +15 at 35bps now!). Dec VIX is continuing to diverge higher against stock exuberance as at least someone is hedging. Following the dismal tail in the 3- and 6-month bill auctions, it seems the US equity market's dissonance is remarkable... It's not just the short-dated Bills, Feb Bills are now 8-9bps higher in yield (triple the levels they started the day at!)



and stocks keep catching down to Dec VIX protection bid...



Chjarts: Bloomberg

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Tue, 10/15/2013 - 11:57 | 4056201 LawsofPhysics
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Wake us when yeilds are back to their historic averages.  In the meantime, Tick tock motherfuckers...

Tue, 10/15/2013 - 11:56 | 4056209 Cult_of_Reason
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Senate Majority Leader Reid: Rating agencies may downgrade the US as soon as tonight

Tue, 10/15/2013 - 11:59 | 4056222 LawsofPhysics
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Ah yes, those "unbiased" rating agencies.  Everyone has their part to play...

Tue, 10/15/2013 - 12:02 | 4056230 hedgeless_horseman
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There is no more Treasury Market.

Tue, 10/15/2013 - 12:00 | 4056240 LawsofPhysics
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I have been quite honest for some time now regarding my long position in black markets and sharecropping.

Tue, 10/15/2013 - 12:04 | 4056243 Cult_of_Reason
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Reid sounded very disappointed. It means NO progress, but the algos are acting as if the grand bargain about to be announced within minutes.


Tue, 10/15/2013 - 12:07 | 4056268 Ham-bone
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Gold isn't the solf underbelly of the bankers - I think gold is 2nd derivative of the true underbelly which is now the T-bill exodus here is the ignition switch which would start the hyper-monetization and send derivatives and PM's on their way.

Stocks and bonds are both reacting as if a hyper-monetization is more and more likely???

Tue, 10/15/2013 - 12:12 | 4056290 Cult_of_Reason
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Obama: "This time's different. I think they should be concerned."

Markets: We are not concerned at all. This time will be the same as last time.

Tue, 10/15/2013 - 12:41 | 4056455 Manthong
Manthong's picture

Obama, Pelosi, Reid...  you own this.

Barak Hoover Obama.. abortion of a health care takeover bill and a horrific stack of apparatchik regulations..

This 11,588,500 word stack and that computer system need to be shoved up your butts:


Tue, 10/15/2013 - 12:09 | 4056276 Kirk2NCC1701
Kirk2NCC1701's picture

"black markets and sharecropping."  Dat's rayciss!


Tue, 10/15/2013 - 12:52 | 4056506 Ham-bone
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respectfully partially disagree - there is no intermediate / long end of the Treasury market...but this has forced all the real market into the T-bills...the largest, fastest rolling, most difficult to manipulate

Tue, 10/15/2013 - 12:08 | 4056272 NDXTrader
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Now how would Sen. Reid know such a thing. So Obama has ordered to turn the screws

Tue, 10/15/2013 - 12:34 | 4056420 Cult_of_Reason
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Obama wants US default, so he can blame the economic collapse on republicans and regain control of the house.


Tue, 10/15/2013 - 13:27 | 4056622 smlbizman
smlbizman's picture

not republicans....but those tea party rebel republicans...

Tue, 10/15/2013 - 12:36 | 4056444 shankster
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The 'justice' dept. will put an end to that.

Tue, 10/15/2013 - 12:49 | 4056492 Bob Sacamano
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Ah, the economy and markets have rallied since the last downgrade.  Why is a downgrade bad??

Tue, 10/15/2013 - 12:09 | 4056275 Urban Redneck
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You don't need mean reversion, and Rip Van Winkle couldn't sleep through the storm that will come to pass long before reversion to the mean.

It's the RELATIVE movement in yields that kills the over-leveraged borrower. Subprime ninjas never endured mean-reversion, so I wouldn't count on sub-prime congress critters subjecting themselves to a worse fate.

(at least until the muppets rediscover the joy of tar and feathers for the tax man- too bad they didn't have cameras in the 18th century, because a picture of what liquid tar or pitch does to human skin might clear up some shit for the dimwits).

Tue, 10/15/2013 - 12:21 | 4056332 WillyGroper
Tue, 10/15/2013 - 12:24 | 4056386 Urban Redneck
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The tar burns and makes the feathers stick, while the victim runs around in agony like a chicken with its head cut off (except for the screaming). And the removal of the solidified tar from burnt skin will be second trip to hell...

Not quite as ornate an animal display as a brazen bull, but damn close and within the limits of a debt serf's budget.

Tue, 10/15/2013 - 12:19 | 4056355 LawsofPhysics
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yes, yes, it's never the fall that kills you, it's the sudden stop (sudden change in velocity).

Tue, 10/15/2013 - 12:45 | 4056478 Stoploss
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Tue, 10/15/2013 - 11:54 | 4056204 kliguy38
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Tue, 10/15/2013 - 11:56 | 4056205 One And Only
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If the goal was to keep confidence in our debt than it appears to be a fail

Tue, 10/15/2013 - 11:57 | 4056206 Headbanger
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Obama wants the default.

Tue, 10/15/2013 - 12:03 | 4056214 LawsofPhysics
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Yes, best of both worlds.  No blame and he will finally gets the chance to "fundamentally change America".

Tue, 10/15/2013 - 12:17 | 4056323 Keyser
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This action would fundamentally change the world and piss off not only our enemies, but our allies too. 


Tue, 10/15/2013 - 12:23 | 4056369 LawsofPhysics
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And what would anyone actually do about it?  The same damn thing happened with the Soviet Union in the late 80's.  Once the Soviet Union no longer existed, neither did their debt.  They still have their nukes, and so will we.  Talk is fucking cheap.

Same as it ever was...

Tue, 10/15/2013 - 12:52 | 4056505 kralizec
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The mother-of-all Cloward-Piven way does the Boy Dicktator and his merry band of jackasses miss this opportunity...this is a once in a millenium chance at fucking America over once and for all...

Molan Labe!

Tue, 10/15/2013 - 12:16 | 4056314 max2205
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And he sure as hell wants to be exempt from his own fabulous healthcare plan

Tue, 10/15/2013 - 12:17 | 4056317 Kirk2NCC1701
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His Masters/Sponsors probably want the Default to suit their NWO agenda.

Obama wants to play along, to suit his megalomaniac ambitions.

"All these [kingdoms] I will give you, if you kneel down and worship me" (Matthew 4:9) comes to mind.

Tue, 10/15/2013 - 12:34 | 4056423 fiftybagger
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This also comes to mind:

Isaiah 14 King James Bible

Tue, 10/15/2013 - 15:05 | 4057245 TwoCats
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Huh?  Which part?  Personally, I thought things looked more like Isaiah 17.

Tue, 10/15/2013 - 11:57 | 4056219 Nothing but the...
Nothing but the truth.'s picture

Problem they have is there ain't no printing machine for low interest rates.

Tue, 10/15/2013 - 11:58 | 4056226 Tsar Pointless
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Bankster gangsters want the default. I'm tired of saying it, but I will continue to until everybody believes it.

Tue, 10/15/2013 - 12:00 | 4056227 BanksterSlayer
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Jim Willie and Max Keiser, among others, have been calling this moment FOR MONTHS now. Jim went so far back on Oct. 06 to say that this is why Jamie Dimon and Lloyd Blankfein went to to meet with the Puppet-In-Chief a few days ago ... "because the interest rate swap derivatives machinery in the bond market is now broken."


Tue, 10/15/2013 - 14:01 | 4056759 Kirk2NCC1701
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Is this part of the ongoing "disagreements" with Gary North?

Doctor North (PhD in History), meet Doctor Willie (PhD in Stats).  I'm curious which one will come out of this 'Octagon'.

p.s.  For the record, Obama's recent meeting with Dimon and Bankfine is not a "first" this year.  This goes back to two prior events this year, when he met with top banking brass.  ZH blogs as far back as April 2013 say that Obama met with Top Bankers at the WH, and that the "connected rumor mill" said that "Something really big is going to happen later this year".  No one had hard info what this was about, but speculation abounded.

Tue, 10/15/2013 - 11:59 | 4056234 Miss Expectations
Miss Expectations's picture


EBT To shutdown Nationwide starting November (USDA Memo)

Tue, 10/15/2013 - 12:03 | 4056255 Keyser
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That's the way I read it. The zombies will be out in force starting Nov 1st. I still have time to get more ammo and booze. 

Tue, 10/15/2013 - 12:30 | 4056406 Winston of Oceania
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Booze is great zombie bait, just set some out and plink away...

Tue, 10/15/2013 - 12:35 | 4056429 earnyermoney
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After Trick-er-Treatn they'll be heading over to Wallymart to stock up at midnight.

Tue, 10/15/2013 - 12:18 | 4056339 Bay of Pigs
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Wolf Blitzer covering the American food riots from the Situation Room?

I'll believe it when I see it.

Tue, 10/15/2013 - 12:23 | 4056364 Jugdish787
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I saw on another site that the funding for the program ends Nov 1 if the shutdown does not end.  According to this site course it is the world socialist web site) states have already cut head start programs.  Talk about the shit hitting the fan if the zombies dont get their free food.

Tue, 10/15/2013 - 12:02 | 4056238 Keyser
Keyser's picture

This crap reminds me of a latin telenovella. Lots of angst and hand wringing, everyone screwing everyone else and there are so many bad guys you don't know which to blame. 

Tue, 10/15/2013 - 12:04 | 4056250 QQQBall
QQQBall's picture

The rating agencies got the memo... err subpeonas

Tue, 10/15/2013 - 12:05 | 4056266 BabyBen
BabyBen's picture

HA HA You can not defeat the printer! We are going higher!

Tue, 10/15/2013 - 12:13 | 4056305 explainstuff
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Anybody else observe...??

Everytime there was a news in the morning that the deal was near, we ticked lower and everytime someone came on to say the deal isn't happening yet or will not yet happen or that there might be a downgrade we ticked higher ... WTF ?? ! Just lmao.

Tue, 10/15/2013 - 12:40 | 4056468 shankster
shankster's picture

Low-info Breaking News!

The US will not default!

Keep it shutdown!

Do not raise the debt limit!

Turn off the tv 'news'.

Tue, 10/15/2013 - 12:42 | 4056475 shankster
shankster's picture

In other news....rating agencies looking for escape hatch.

Tue, 10/15/2013 - 12:56 | 4056512 Bob Sacamano
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Despite what the left media suggests, default means not servicing debt payments.  Default is not going to happen.

And why does a TBill spike to 0.40% worry folks when TBills have averaged 4.00% for the past 50 years??

Folks need to find something to worry about.  But it is good for the media - it consumes tv, radio, internet capacity (which at the end of the day is what matters to the media). 

Tue, 10/15/2013 - 13:01 | 4056546 LawsofPhysics
LawsofPhysics's picture

"default means not servicing debt payments." yes, and debt payments increase expoentially as interest rates rise.  So, yes, at the current rates, we won't default.

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