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Scorching Demand For 5 Year Treasurys: Indirect Bid Highest On Record
If yesterday's 2 Year stopping through auction was best described as "blistering", then today's $35 billion sale of 5 Year paper, which again stopped through the When Issued 1.614% by a whopping 1.9 bps, was nothing short of a scorcher.
Oddly enough, in a time when demand considerations should be sparking a lack of primary market demand for paper, investors just can't get enough "high quality" collateral - that or they are just more focused on the global slowdown and not big fans of the latest "US is decoupling" thesis - and as a result while the Dealer bid was quite possibly a record low 25.1%, it was the Indirects that stunned with their aggressive bid, taking down a record 65% of the auction, leaving just under 10% for Direct bidders. Finally, the Bid to Cover left little to the imagination: soaring from last month's paltry 2.36, it jumped to 2.91, the highest print since March. Needless to say the entire curve buckled tighter on the news, with the yield on the 10 Year printing at a day's low of only 2.279% as once again all the "economic recovery" shorts are left scrambling.
At this rate we may run out of superlative adjectives for the upcoming 7 Year auction which will complete this week's bond issuance.
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When Spain's 10 year trades through 2%, and appears to be more "in-line" with the rest of the world's yields, then sumptin's gotta give. And it's gonna be toward lower rates. Yeah yeah yeah, I know, a broken record. Now, if only the gold side of my positioning would start responding, then I'd be a really happy camper
PS 7's have always been a dog. Always. Orphan part of the term structure. Well, maybe could start pricing new car loans off of 'em
LOL
Scorching demand for physical gold.
Lease rates converging and inverting and shooting up.
http://www.kitco.com/charts/popup/au0365lr.html
I just bought another 1000 oz of boat ballast knuks.
Means the price will probably go down.
Sorry in advance.
Boom. Raise rates my ass.
Yup...
And this is After they stopped buying the stuff.... duh
Or perhaps they just changed what they were buying and failed to mention that little tidbit of information.
Gee..You think there might be some foreign buying going on?
German 5-year Bunds yield 0.12% and Japan's 5-year JGB yields 0.11% - both in DEPRECIATING CURRENCIES. You can lose the entire coupon (or more) in ONE DAY of F/X movement.
Bwhahaha. Going after the railroad industry in North Dakota. Sounds like bad news but in fact is great news as we start to hold these mass murders to account.
Yet stocks are mostly flat. That means that the Fed or some other CB is most likely directly manipulating stocks. I suppose some of that money could be coming from some other junk part of the paper economy, but if I had to bet, I'd bet on the Fed.
Come watson, the game is afoot....
Scorching demand for middle of the road flight-to-safety.
I wonder how much of that the banks bought with backdoor Treasury funds at 0.10%?
Oddly enough, in a time when demand considerations should be sparking a lack of primary market demand for paper, investors just can't get enough "high quality" collateral . . .
I suppose I must be in the group who don't understand the need to purchase high quality collateral.
If I have the cash to make the purchase, why isn't that cash considered collateral of the very highest quality?
It's called shadow banking, and it makes sense if you are a parasitical banker. To the rest of us, not so much.
In what way does handing over cash for a debt instrument provide better collateral than the cash?
I have some understanding of what shadow banking is. What is shadowy about considering cash lesser quality than debt?
However, I cannot concieve of a reason that cash is not the best "high quality" collateral.
Just one more screaming alarm warning the end is nigh.
2015: The year the true suck begins.
V Good
Keith McCullough @KeithMcCullough 21m21 minutes agoVIDEO (2mins) Macro Notebook 11/25 Oil | Russia | UST 10YR
https://app.hedgeye.com/insights/40847-keith-s-macro-notebook-11-25-oil-...
Way to pick a guy who's been wrong so long he wouldn't know what right is.
But go ahead and stick with him. It's your money to throw away...
Kind of funny the rush to safety in the bond market..but yet the talking heads are all saying how great our economy is.....GDP up today...something is amiss...Down here in Colombia our stocks have tanked...and the Government is very worried about the price of oil..its 75% of our exports...
It's not a flight to safety and it's not a collateral grab. American debt is cheap in a world where German 10's yield 75 cents, Japanese 10's yield 44 cents and Swiss 10's yield 34 cents.
There aren't enough bonds to go around (ridiculous as it sounds) and this is what happens when demand overwhelms supply. And this on a day when GDP came in up 3.9%. Go figure!
is there in "indirects" contrarian indicator somewhere? please?
nahhh forget it. i give up