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30 Year Yield Tumbles To May 2013 Lows As 3 Year Paper Sells In Blistering Auction

Tyler Durden's picture




 

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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Tue, 10/07/2014 - 13:21 | 5299444 ekm1
ekm1's picture

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

Tue, 10/07/2014 - 13:22 | 5299464 Zirpedge
Zirpedge's picture

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.  

Tue, 10/07/2014 - 13:23 | 5299480 ekm1
ekm1's picture

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

Tue, 10/07/2014 - 13:31 | 5299532 Bell's 2 hearted
Bell's 2 hearted's picture

and commercial paper market still in collapse mode

 

treasury bills good substitute

 

http://research.stlouisfed.org/fred2/series/COMPOUT

Tue, 10/07/2014 - 15:31 | 5300183 Overfed
Overfed's picture

Cleanest dirty shirt?

Tue, 10/07/2014 - 13:26 | 5299492 Pool Shark
Pool Shark's picture

 

 

 

And some people still believe the fed will raise rates next year...

 

 

Tue, 10/07/2014 - 13:27 | 5299500 ekm1
ekm1's picture

they will, otherwise wold abandons usd totally

Tue, 10/07/2014 - 13:32 | 5299541 Pool Shark
Pool Shark's picture

 

 

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...

 

 

Tue, 10/07/2014 - 13:33 | 5299556 ekm1
ekm1's picture

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

Tue, 10/07/2014 - 13:39 | 5299583 Pool Shark
Pool Shark's picture

 

 

Uh, no.

Obviously, you haven't been paying attention:

http://finance.yahoo.com/charts?s=UUP

 

Tue, 10/07/2014 - 13:41 | 5299607 ekm1
ekm1's picture

I can't see that one now. Yahoo is blocked at work.

What does it say?

Tue, 10/07/2014 - 13:44 | 5299630 Pool Shark
Pool Shark's picture

 

 

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.

 

Tue, 10/07/2014 - 13:47 | 5299647 ekm1
ekm1's picture

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.

Tue, 10/07/2014 - 13:40 | 5299608 Bell's 2 hearted
Bell's 2 hearted's picture

some bilateral agreements

 

good luck taking one of those currencies to 3rd party (in large scale)

Tue, 10/07/2014 - 13:36 | 5299570 Bell's 2 hearted
Bell's 2 hearted's picture

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

Tue, 10/07/2014 - 13:41 | 5299604 ekm1
ekm1's picture

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?

Tue, 10/07/2014 - 13:42 | 5299619 Bell's 2 hearted
Bell's 2 hearted's picture

i didn't say everybody.  Just mercantile economies.

 

US done with "printing" (for now)

Tue, 10/07/2014 - 13:45 | 5299637 ekm1
ekm1's picture

If mercantile economies print, it means that they export less, which is exactly what has occurred

World trade has all but halted

Tue, 10/07/2014 - 16:12 | 5300409 LawsofPhysics
LawsofPhysics's picture

"World trade has all but halted" -- Not so, I just sold another $200,000 in soybeans to a customer in Sao Paulo.

Tue, 10/07/2014 - 18:59 | 5301111 ekm1
ekm1's picture

I exaggerate a lot to make the point

Tue, 10/07/2014 - 13:34 | 5299562 monopoly
monopoly's picture

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!

Tue, 10/07/2014 - 13:43 | 5299618 ekm1
ekm1's picture

chances are high there will be assassinations if they don't.

World Oligarchs being harmed by zirp won't take it any longer

Tue, 10/07/2014 - 13:26 | 5299493 Bell's 2 hearted
Bell's 2 hearted's picture

Winner

 

Deflation on tap

 

learn it 

 

love it

Tue, 10/07/2014 - 13:22 | 5299470 LawsofPhysics
LawsofPhysics's picture

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...

Tue, 10/07/2014 - 13:25 | 5299487 ekm1
ekm1's picture

paper dolar is like gold now, 

Electronic dollars are just for suckers. I'm talking massive amounths of them

Tue, 10/07/2014 - 13:33 | 5299546 LawsofPhysics
LawsofPhysics's picture

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...

Tue, 10/07/2014 - 13:36 | 5299567 ekm1
ekm1's picture

It has been going on since 2011 when oil crossed $80.

Now it's about to be undone

Mop up...........

Tue, 10/07/2014 - 13:29 | 5299495 Seasmoke
Seasmoke's picture

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. 

Tue, 10/07/2014 - 13:23 | 5299477 seek
seek's picture

Indeed, combined with the other news lately I think we're seeing a flight to (relative) safety.

Not a good sign.

Tue, 10/07/2014 - 13:28 | 5299511 Pool Shark
Pool Shark's picture

 

 

"Not a good sign."

 

Only if you hold leveraged assets.

 

Let's all repeat the mantra: "Cash, Bonds, Gold"...

 

Tue, 10/07/2014 - 13:20 | 5299450 Cangaroo.TNT
Cangaroo.TNT's picture

Why is ZH wasting time with this pablum and ignoring important news like the new ice bucket challenge, #WakeUpCall?  Hmmmmmmmm?

Tue, 10/07/2014 - 13:23 | 5299476 Bell's 2 hearted
Bell's 2 hearted's picture

"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" 

Tue, 10/07/2014 - 17:53 | 5300892 SAT 800
SAT 800's picture

LOL. I hope they did too !

Tue, 10/07/2014 - 13:27 | 5299502 falak pema
falak pema's picture

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? 

Tue, 10/07/2014 - 13:29 | 5299513 FieldingMellish
FieldingMellish's picture

... 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....

Tue, 10/07/2014 - 13:32 | 5299536 eddiebe
eddiebe's picture

I don't know who said it, but it surely applies here: ' There's a sucker born every minute."

Tue, 10/07/2014 - 13:34 | 5299561 Pool Shark
Pool Shark's picture

 

 

Yes, there is. The suckers are buying stocks.

The smart money is buying Cash, Bonds and Gold...

 

Tue, 10/07/2014 - 13:35 | 5299566 LawsofPhysics
LawsofPhysics's picture

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.

Tue, 10/07/2014 - 13:41 | 5299612 Pool Shark
Pool Shark's picture

 

 

If after 10 minutes of playing poker, you haven't spotted the sucker; then you're the sucker...

 

Tue, 10/07/2014 - 13:55 | 5299690 Kreditanstalt
Kreditanstalt's picture

Wait til someone decides to SELL...then they'll find out in a hurry their "wealth" never WAS "real" at all. 

Tue, 10/07/2014 - 17:56 | 5300898 SAT 800
SAT 800's picture

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?".

Tue, 10/07/2014 - 13:54 | 5299684 Kreditanstalt
Kreditanstalt's picture

Hahaha...the overleveraged rats dash for the "safe" collateral on offer...!

Tue, 10/07/2014 - 14:38 | 5299936 Spungo
Spungo's picture

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.

Tue, 10/07/2014 - 17:57 | 5300903 SAT 800
SAT 800's picture

yeah; why not? isn't it always true that whatever happened last year always happens this year ? hmm?

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