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Foreign Central Banks Buy More Than Half Of 3 Year Treasury Auction, Highest Indirect Takedown Since March 2010
Kicking off the weekly Treasury issuance was today's 3 Year auction which was another very strong auction, with the High Yield of 1.104%, despite being the highest since April 2011, pricing 1.1 bps inside of the When Issued at 1.115% at 1 pm. The Bid to Cover of 3.33 was right on top of the TTM average, and just a fraction below the 3.345 in January.
But the real story was in the internals, which again saw subdued Directs interest, who took down 8% of the final allotment, it was the Indirects (i.e., foreign central banks) which once again loaded up, taking down 51.4% of the auction, which was also the highest Indirect takedown since March 2010. This meant dealers were left with 40.5% of the issue, weill below the TTM average of 47%, which is understandable since in the lack of POMO, dealers can no longer "flip that bond" right back to the Fed in the next POMO in a few days.
Altogether a very strong auction, and certainly another confirmation that nobody is concerned about a surge in short-term rates any time soon.
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Congrats Jim!!!!
'Mad Money' turns 10! Cramer rings NYSE bell
CNBC's Jim Cramer is celebrating his 10th anniversary of 'Mad Money' this week. On Tuesday, he rang the opening bell at the NYSE.
BOOYAHHHHH
OK guys and dolls, here's the proof of the pudding.
If every CB wants to expand their money supplies, buying debt to increase the M's, driving down currency exchange rates and interest rates to do so....
The avowed method behind the madness, globally
And they either can't find enough of their own bonds or they're yielding less than Zero...
The very same thing is accomplished by buying US Treasuries.
It expands their domestic money supplies, driving down the exchange value, etc., etc., etc.
This is a global financial market.
If everybody drives their rates to negative territory, everybody elses' gonna follow, so to speak.
Hence, massive take-down by foreign Central Banks.
Put it on yer books with real coupon income is a good thing.
Getchur bonds while they pay interest to you.
Then, when everything goes negative, borrow like a maniac.
Things be fucked up, folks. All the "normal" relationships are dissolving right before our eyes.
"It's not as market, it's a batshit insane wild mouse ride!"
Wait, I thought ZIRP was the new normal. Are you saying that we're getting a newer new normal with NIRP? Fuck, this makes my head hurt. If this were a physical science where the model had to match the real world, I'm convinced that somebody would be looking at the setup saying "nope, don't do that. You have to divide by zero to get that result out of the model, which makes it meaningless."
1% for 3 years looks great compared to 30 bps for German 10 years, or literally paying to hold German (and other ) 3 years and 5 years.
But it really is about the price appreciation, not yield. They expect US to go to negative interest rates soon too!
30bps in your dreams -- try 23. And you better load up on those right now, 'cuz bargains like this don't last long!
Anyone surprised that the UST was able to even get this auction funded. Every ZH article for six months has warned the other countries were flocking to Puutie's high yielding Ruble or the high yield CNY. Collapse of the "petrodollar" used to also buy pumpkins and Porsches has been announced so many times. Somebody has some splainin to do.
this is the financial version of a perpetual motion machine. these ivory tower Einsteins have broken all the laws of financial physics. cold fusion is just around the corner.
Their central bank buys our junk bonds, and our central bank buys their junk bonds. each bank then uses the income from those sales to buy more of the other guys junk. Shazaam, perpetual financial motion.
yup - every CB will be chasing yield and price appreciation.
As another ZH article suggested flattening of Euro yield curves, Treasuries will be bid up. Then price appreciation become self-fulfilling as initial demand (Indirects) secures the basis of the auction. then other traders will see the price action and bid. Treasuries prices will trade higher from here will a sell of their sovereigns to their CB and proceeds used to buy US Treasuries.
long: TLT and SPXU
NoVa
instead of printing money to buy your debt outright you team up with other CBs and buy each others. Central Banking circle jerk, just a global ponzi now.
Are you saying that if I bought Gold 6 years ago (March 2009), versus buying Stocks at the same time, that I'd have the "Wealth Effect" with Stocks today? My Austrian/Libertarian Economics head is about to explode. Maybe my Dilithium Crystals too.
Sarcasm and unpleasant Truthiness aside... it goes back to Basics: "Every Game has its Sponsors, Rules, Rule Makers, Judges & Referees, Players and Audience. Get to know each of these very well, and decide which you want to be or can be, and then proceed accordingly".
Lesson: As libertarians/Libertarians we often forget these Basics, and get overly focused on just the Rules. It is no wonder then, that the Game and our Bet didn't pan out the way we expected?
That's not foreign banks it's the Fed!
"That's not foreign banks it's the Fed!"
All one in the same, thus explaining the 13T given by the FED to "foreign banks" in 2008.
One big Rothschild syndicate impossible to disambiguate or dis intertwine.
One ponzi house of Red Shield cards for all. If not, you get invaded and destroyed by the armies of their subject states.
Or could it be the ECB who just started it's QE? Covertly of course.
Thank god there ain't no CB manipulation going on.....
and why shouldn't the germans issue 3 year debt at -22bps and buy UST 3yr @ 108bps. Nice little matched 130bps arbitrage.
Because either 1) they will need to hedge the exchange rate (which will have a cost) or 2) go unhedged and hope the recent (9 month) downtrend in EURUSD will be kept throughout the 3-year holding period.
No need to hedge! "Everything is Awesome!" ;)
Since March of '10. Hmmm. What happened in early May of '10?
Bwahahah
what could go wrong?