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30 Year Yield Tumbles To May 2013 Lows As 3 Year Paper Sells In Blistering Auction
Moments before today's first of the week auction of $27 billion in 3 Year paper concluded, the yield on the 30 Year was sliding, breaching the lows of 2014. Which obviously led most to suspect that demand for the 3 Year would be blistery. And sure enough, it was, with the yield on the paper pricing a whopping 0.9 bps through the 1.003% When Issued at 0.994%, and printing under 1% once again, after surpassing 1% in September which was also the highest yield since May 2011. The internals were very strong as well, with the Bid to Cover of 3.423 jumping from September's 3.171, the highest since February's 3.450. Indirects took down 35.5% of the auction despite China's holiday, which left 47% for dealers and 17.4% for Directs, just modestly below the 18.8% TTM average.
The strong auction pressured yields lower across the curve and the 30Y Yield broke to new 2014 lows - the lowest since May 2013's Taper Tantrum began.
While many suggest Treasuries are mispriced, it appears they are increasingly trracking the realization of weaker-than-expected US macro data (despite the constant narrative of 'things are getting better' in America)
It appears the bond market was pricing in the weakness that The IMF is now surprised by.
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It is better to lose 2-3% holding USTs rather than losing all by holding USD in a bank that collapses, hence USD reserves the banks holds would vanish
Nobody can stash billions of dollars in paper cash in sacks.
Electronic dollars have nowhere to go, absolutely nowhere.
This is pure and simple USD dumping like a hot potato game.
Nobody wants to hold them
I balance my portfolio equally (read 50/50) between USD and T-Bills. I love cash but respect the strength and stability of a treasury note.
It depends on how much USDs
If you have $1 billion, you can't hide it anywhere except for in a bank
If the bank collapses, then they vanish
Whereas USTs you lose only small % by holding it, when rates rise
and commercial paper market still in collapse mode
treasury bills good substitute
http://research.stlouisfed.org/fred2/series/COMPOUT
Cleanest dirty shirt?
And some people still believe the fed will raise rates next year...
they will, otherwise wold abandons usd totally
You're missing the point. The fed won't need to raise rates.
When the stock market crashes (as it eventually must) there will be a rush to safety just like 2008.
I expect bond yields haven't reached their lows...
No I am not missing anything
Nobody cares about the Federal Reserve. Just a bunch of academics
World use of USD for REAL TRADE matters.
And world is abandoning USD for real trade
Uh, no.
Obviously, you haven't been paying attention:
http://finance.yahoo.com/charts?s=UUP
I can't see that one now. Yahoo is blocked at work.
What does it say?
It 'says' that over the last 3 months, the US dollar is up 6.64%, and that the fed will not be raising rates next year.
peanuts
There is another 20%+ for USD to gain
There is too much of USD
USA needs to be paid with real goods and services, not with foreign currencies. If everybody prints it means that nobody is expanding real output. You can't eat currency
Mop up is inevitable which becomes a margin call.
some bilateral agreements
good luck taking one of those currencies to 3rd party (in large scale)
not a chance
japan down
europe going down
china coming in for a landing ... ray charles at the controls
race to bottom for currencies ... mercantile economies will double down on devaluation
you can't eat currencies
If everybody prints it means that world trade has stopped
Who is going to produce stuff if all a country can do is print currency to make it cheaper?
i didn't say everybody. Just mercantile economies.
US done with "printing" (for now)
If mercantile economies print, it means that they export less, which is exactly what has occurred
World trade has all but halted
"World trade has all but halted" -- Not so, I just sold another $200,000 in soybeans to a customer in Sao Paulo.
I exaggerate a lot to make the point
Pool Shark,
Yup, right on. There is no way they are raising rates. And just as Buzz has told us time and time again. QE to "Infinity"....Until it all blows up and goes Poof!
chances are high there will be assassinations if they don't.
World Oligarchs being harmed by zirp won't take it any longer
Winner
Deflation on tap
learn it
love it
As history has shown time and time again;
1) when fraud is the status quo, possession is the only "law" that matters.
2) in such "deflationary" collapses even physical currency has significant added value.
all you need to know...
paper dolar is like gold now,
Electronic dollars are just for suckers. I'm talking massive amounths of them
When you see digital dollars rushing to commodities and physical assets, then you can panick. Not quite there yet.
I spent some more of them on another nice hybrid thermal scope the other day...
Good for picking off rodents on the back 40 from the comfort of an easy chair...
It has been going on since 2011 when oil crossed $80.
Now it's about to be undone
Mop up...........
That's all I know as well.....I want to be holding physical for any scenario that's going to hit these shores in the very very near future.
Indeed, combined with the other news lately I think we're seeing a flight to (relative) safety.
Not a good sign.
"Not a good sign."
Only if you hold leveraged assets.
Let's all repeat the mantra: "Cash, Bonds, Gold"...
Why is ZH wasting time with this pablum and ignoring important news like the new ice bucket challenge, #WakeUpCall? Hmmmmmmmm?
"While many suggest Treasuries are mispriced, it appears they are increasingly trracking the realization of weaker-than-expected US macro data"
things will get worse before they get better
hope everyone enjoyed the "recovery"
LOL. I hope they did too !
With a USD that is going ballistic I don't see the FED increasing the interest rates.
Just my take.
This high USD is gonna create a profit crunch for US corporates who export; like Boeing.
So, ZH did an article which said a soft Euro meant death to Eurozone.
What is the Tyler take on a high USD for the year ahead for the US corporates?
... but... but... rates are going to go up... CNBC said so.... they said to sell all your PMs to stay one step ahead of the crowd....
I don't know who said it, but it surely applies here: ' There's a sucker born every minute."
Yes, there is. The suckers are buying stocks.
The smart money is buying Cash, Bonds and Gold...
moreover, the quantity of suckers running from one side of the boat to the other is truly amazing. Of course all these pension funds and 401k slaves don't even relize they are the suckers.
If after 10 minutes of playing poker, you haven't spotted the sucker; then you're the sucker...
Wait til someone decides to SELL...then they'll find out in a hurry their "wealth" never WAS "real" at all.
As it has always been; as it always will be; when all the buying is done, and the fat old white men with their cigars are congratulating each other; someone will want to sell; and the awful words will be heard, "to who?".
Hahaha...the overleveraged rats dash for the "safe" collateral on offer...!
This is clearly good news. The S&P went up like 30% last year, so repeating the conditions of last year = +30%. I'm going all in.
yeah; why not? isn't it always true that whatever happened last year always happens this year ? hmm?