4-Week Bill Prices At 0.000%, Bid To Cover Soars To Highest Since 2011

Tyler Durden's picture

Stocks may be masquerading as a big bounce today, driven by a VIX slam which has gotten the algos to ramp the S&P higher and of course a perfectly innocuous gold slam which as usual took out the entire bid stack, but the real money is furiously going elsewhere, such as today's 4 Week auction. Two things were notable: first - the rate was a solid 0.000%. This is not that surprising: after all under ZIRP, and as long as the Fed has control and the USD is the reserve currency, ultra-short term maturities are cash equivalent, which is why investors don't mind getting zero return in exchange for 1 month maturities.

However, what was far more notable is that the Bid to Cover in today's auction just soared to 6.36x, highest than last week's 5.66x, and the highest since December of 2011, when the scramble into short-term paper was a function of year end window dressing (made since unncessary courtesy of the Fed's Reverse Repo facility).

So while algos are levitating stocks higher based on simple carry currency/VIX correlations, why the sudden real money scramble for the safety of near-term paper?


Finally, what is also notable is that all ultra-short durations are now trading at negative yields

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buzzsaw99's picture

Needs moar collateral to borrow against and buy moar stocks?

TruthInSunshine's picture

Shit looks weird when the government is trying to manufacture crisis management:


buzzsaw99's picture

the comment you made in that link warms my heart. i hope it's true because pension funds have never in history sold at the highs that i'm aware of.

fonzannoon's picture

Pension funds are the dumbest money around. Put the 10yr at 3.25% and the S&P at 1900 easily based on that. This is why they did not bail out Detroit. The Bernak is tired of teeing it up and then watching these pension funds swing and miss. They will be shoved into SPY at gunpoint by their empoyees if need be,

mvsjcl's picture

There's a very good reason why pension funds are the dumbest money around. In fact, the smartest thing they did is to convince you that they are "dumb" money.

TruthInSunshine's picture

Some will no doubt claim I'm all tin-foily, but I have little doubt that EVERYTHING being done right now is Major Crisis Management 101, and the government is sharing the play book with all the big players.

It's all just way too bizarre to be happening this way if even a remotely efficient, free market (when I say "remotely" I mean anything short of absolute central planning) were at work.

Ramp this, get those pension funds (and tax revenue) back near pre-crisis funding levels, ramp that, tamp those rates down, pull on this, ensure there's enough monetization, push on that, ensure that there's no sudden dump or crisis of confidence in any particular sector/fund, etc....and on and on.

So many balls to juggle in the air at the same time...

buzzsaw99's picture

All I know is that who has been in since at least the beginning of 2013 and hasn't already made ten years worth of gains when judged by T bond rates? Anyone who doesn't take some off the table is an idiot. Let those who were late to the party chase it higher while you raise cash I say.

TruthInSunshine's picture

There's no factual rebuttal now that, unless inflation is OVERSTATED by official Fed metrics (and it's not; just the opposite), we're clear into NIRP Land now.

buzzsaw99's picture

yeah, but still, nirp doesn't make twitter a "buy"

TruthInSunshine's picture

IMO, unless one is fed Fed info, it's a gambler's den or survival of the fattest.

ArisAron's picture

"why the sudden real money scramble for the safety of near-term paper?"


Hmm . . .  what could it be . . . . WWIII on the horizon perhaps?

Cpl Hicks's picture

Yeah, and couple that with the chilling words- "perfectly innocuous gold slam" and you know that the shit is going down.

Grab your AR's, load up on more ammo and meet me at the compound up in the Selkirk's! First one there need to air out the bunkhouse.

FieldingMellish's picture

First the 3month goes sub-zero, then the 1yr, then the 2yr.. 10yrs will be sub 1% and 30yrs will be sub 2%. The Fed says... PUT YOUR MONEY IN STAWKS... OR ELSE!

madbraz's picture

If the 30yr goes to sub 2%, that will be a total return of more than 50% on the bond price. 


Yet, every hedge fund is on the other side of that bet - hopelessly hoping that yields will break out to the upside.


3.8% coupon and upside of 50% - what's not to like.

FieldingMellish's picture

... and it means your cash is not in a rather precarious stock market...

Dr. Engali's picture

We've seen this before, it's nothing new. just short term money finding a temporary home. When the ten year pushes down below 2% again then I'll take notice.

Debtonation's picture

Doesn't make sense though.  Why not deposit the money at the Fed and make 0.25% IOER.  Why does all this hot money think that the Fed is more risky than the Treasury?

TruthInSunshine's picture

You need to be a registered, licensed playa' to get the easy-cheesy Federal Reserve excess reserve interest paid to you.

Ya' need to be a bank that's given a racketeering license to bank your bank with Da Bank of Bernank.

Debtonation's picture

I suppose that's part of it.  I'd think there's still a way to funnel money through a megabank to the Fed and earn some 'risk free' fiat.  WF still manages to pay me 0.1% on my cash, but they wouldn't be able to do that in the Treasury bill market right now.

X_mloclaM's picture

Ya, zactkly, so thus:

in this new world reserve fiat era, the mechanicas aren't 70's ish whereas price inflation could be in areas...

such it DOES make sense, the debt and currency are one fail together, and we just aren't there yet as dollar purchasing power (or yen) has yet to simply crush the rational expectations of depreciation. Until then, adding liabilities like a banshee relative to the pool of good assets, where encumbrance, reuse and rehypothecation reside...

So in a depression, supply of loanble funds is pulled in a free market, as I aint lending in a risky environment and wanna keep more for my own buffa

But in a fiat Volker-enabled paradigm, supply isn't pulled is slammed fulla papa, meanwhile no one wants to borrow or increase debts in a damn depression... NOW GUESS WHAT HAPPENS TO RAATES>


youngman's picture

Why spend your cash just to get the same back in 1 month..minus expenses...fees..or is this just churning an account to make fees by the bankers...

SAT 800's picture

Well, at least it's re-assuring to find out the real level of inflation is less than 0.0000. ?

Yancey Ward's picture

Worries about the budget and debt limit.

Alea Iactaest's picture

Last time the 4-week priced at 0.000% was a couple of weeks before The Sequester. Questions?

Rising Sun's picture

Another shit show that will run its course head first into a block wall.


Would be good to read more about China's POMO spend - 3.5T per annum last I read - and how those fucking communists will unwind this bigger shit show.


Amerikans going to the mattresses ?

Debtonation's picture

During Europe's debt crisis we saw short term yeilds go negative because 'cash' was considered risky in the bank. Could this be an indication of a big bank about to get squeezed?

SAT 800's picture

These headlines seem like the Onion at first. It's hard to believe it's real. Well, I guess it isn't really real, but really; billions of dollars that the owners can't find anything to do with but buy a government promise to give them back the same thing in a month? Next month they'll have figured out a better idea? I don't get it.

Dewey Cheatum Howe's picture

Off topic but of interest.

DEA really did work with the Sinoa Drug Cartel between 2000 - 2012 according to Mexican court documents. Fast and Furious is backkkkkkk. But of course the MSM will sweep this story under the rug.


An investigation by major Mexican newspaper El Universal has concluded that the United States government worked with the Sinaloa cartel from 2000 and 2012 as part of a divide and conquer strategy. In exchange for intel on rival cartels, the U.S. government allegedly allowed the cartel to smuggle billions of dollars worth of drugs.

The report seemingly aligns with claims made by Jesus Vicente Zambada-Niebla, the Sinaloa cartel’s “logistics coordinator” and son of cartel leader Ismael “El Mayo” Zambada.

El Universal has published official court documents that include corroborating testimony from a DEA agent and a Justice Department official.


Orginal links, court documents and Mexican news story sourced in the report.


and translated to English since theblaze cherry picks and doesn't cover some other important details in the reports.


q99x2's picture

End 2011 FED computers took control of stock indexes. Maybe latest Beta release.or Upgrade.

Spungo's picture

"Why spend your cash just to get the same back in 1 month..minus expenses...fees..or is this just churning an account to make fees by the bankers..."

Bank deposits are only insured up to a certain amount. If you have $100,000,000 and you're afraid of bank collapse, 30 day paper or 90 day paper is the safest thing to buy. You're willing to get 0% return on it because the entire amount will be paid back. Germany had negative interest rates a couple years ago because nobody wanted to keep their money in a European bank and Germany was the only European government that seemed capable of paying the money back in the future. 
Interest rates of 0% or less are a sign that rich people are very scared. We should probably examine why they are scared. 

jtz5's picture

True, but can't people just open up additional accounts to get under the $250k limit?  I wouldn't know, personally.

Tinky's picture

Good luck with that! If you've got $5m spread around in 20 accounts, the FDIC will give you $250k – if that – after a systemic failure.

TruthInSunshine's picture

I think he's referring to businesses that need safety and liquidity (well, if 4 weeks is short enough a duration) to ensure the funds are there to make payroll, etc.

NotApplicable's picture

Could someone explain why the "Allotted at High" rate is 28.27% when the low rate is also at 0.000?

TruthInSunshine's picture

Let me rephrase - I think it has to do with the fact that "noncompetitive" bids were filled first, so these must have comprised 28.27% of total allotment.

Essentially, there was no difference between high, median or low today because of the noncompetitive bids having to always be filled first, automatically.

rubearish10's picture

Stocks masquerading from VIX slam?? Hmmmm <cough>, come on,,,,JPM and Wells survived EPS report and Google's is taking over the world. Doesn't that explain everything? Plosser comments seemed tame too. Fuck this shit!

seek's picture

"why the sudden real money scramble for the safety of near-term paper?"

Someone knows something we don't. We saw the exact same shit go down in 2008 before the big hit came. The difference now is the PPT is trying to hide it -- which means we see an even more jarring correction. Unlike 2008, announcing changes to FDIC insurance limits isn't going to fix this plunge into hell.

Spungo's picture

"Someone knows something we don't. We saw the exact same shit go down in 2008 before the big hit came."

The difference is that this time it's harder to see. In a normal business cycle, the central bank raises interest rates to slow down the economy. Slowing the economy is important because it prevents bubbles and misallocation of capital. Rising interest rates (declining bond prices) usually precedes a market correction or a crash. People who see the crash coming get out of stocks and into bonds. If you know the market is going to correct and interest rates will start falling (bond prices rising), do you want to lock in a high interest rate for a short term or a long term? Long term, obviously. Higher demand for longer term bonds causes the yield curve to flatten. In extreme cases, the yield curve can become inverted so short term bonds have higher interest rates than long term bonds. Remember that long term bonds you buy today turn into short term bonds next year or the year after, so if short term bonds next year will have lower yield (higher price), the high interest and long term bonds have both good yield and a rising value. What's different this time? Short term bonds are already at 0% and long term bonds have pathetic yield. The interest rate can't go any lower, so it will probably go higher in the future. That means longer term bonds you buy today might be sold at a loss next year if interest rates rise, and they probably will rise when inflation expectation rise. The ONLY reasonable and safe thing to buy is 30 day paper. There is no reason for the yield curve to become inverted this time. It's actually the opposite - the increased demand for short term treasuries should cause the yield curve to be steep and healthy looking. This crash will totally blindside people who are waiting for a flat or inverted yield curve.

X_mloclaM's picture

"the central bank raises interest rates"

In the US, the Fed removes reserves to attempt to match a rate target near marketprice their owners trade at.