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"Specials Gallore": European Treasury Shortage Lands In The US Ahead Of 10, 30 Year Auctions
The great bond shortage (thanks to Q€ monetizing well over 100% of the available net supply in 2015) is not just a European phenomenon this morning. As the latest repo data compiled by Stone McCarthy reveals, the "specials gallore" in the US as well, with the 3 Year (following yesterday's barnburner auction), the 10Y and the 30Y all trading special, i.e., sub zero, in repo, suggesting once again that there is a shortage of underlying paper.
From SMRA:
There is a 10-year note auction this afternoon, which often causes the corresponding issue in repo to tighten. This morning is no exception, as the 10-year note is trading special at -174 basis points, the tightest it has been since June 13th of 2014. After the auction this afternoon it is likely pressure will ease off the 10-year note, and after the auction settlement March 16th the new on the run issue will likely trade near the general collateral rate.
The 3-year note continues to trade special this morning, though it has experienced a massive easing of pressure since yesterday. It will likely trade less and less tight until the auction settlement on Monday. The 5-year note has tightened, and the 30-year bond is trading special prior to the bond auction tomorrow. A couple of the off the run issues are trading tight as well. The off the run 2-year note is at -3 basis points and the off the run 30-year bond is at -4 basis points.
Whether this is just a function of recent/upcoming 3/10/30 bond auctions, or if Europe's central banks are quietly loading up on paper thus forcing another collateral squeeze is currently unknown.
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Hey I'll sell em my old truck as collateral for $100,000!
This will not end well...for any of us:
http://www.debtcrash.report/entry/i-bought-what
What needs to happen, is we need Blythe Masters in there to create some CDS's for the repo mkt, then re-hypothecate the unproducable, unrepoable, treasuries that Jack thinks he is getting back, that don't exist in the first place.
Then, sell the fuck out of gold cause it's Wednesday...
Yesterdays auction had a big foreign part to it..
But what is the significance of negative yield in repo collateral.....?
OK, so let me get this straight. They've run out of shit to buy with their poofed-out-of-thin-air currency? Does that constitute a joke? Delicious irony?
Obviously they need to go down the quality chain a bit so they have more stuff to buy. Junk bonds, penny stocks, etc. Hell, why not just start buying accounts receivable straight out of corporate balance sheets? You want a direct cash injection into the "real economy", that would be one heluva way to do it.
The inflation reservoirs are full. But money keeps on pouring.
The Fed chief has her finger in the dyke.
The Fed chief *IS* the dyke. FIFY
Fingering herself
you only think you're joking
I'm not entirely sure I was joking.
just a simple question: what do you think is the purpose of Q€?
alternatively, what do you think was the purpose of the anti-Q€ that preceded it, since the stated goal is to go back to the higher balance sheet levels of 2012?
note the ripping tides of the Mighty Dollar, in all this
That's what puzzles me. Why "tighten" so hard, only to ease essentially to unch? The balance sheet of the ECB looks completely different than all the other central banks. Perhaps you could enlighten me on the complexities of running a central bank within a currency union? But if I had to take a stab at it, I'd say doing this massive QE now when the gap between the stated policy of the ECB and Fed is so large...you'd have to want your currency very very weak. I don't buy Draghi's "omg deflation" argument at all. Actually this seems very similar to the Bank of Japan. In fact, the EUR is now more attractive as a funding currency(essentially the market's whipping currency) than the JPY or the CHF(lol)
Currency wars, meh, same as always.
So then, do you think EUR/USD < 1.00 is justified?
The whole thing seems ridiculous, honestly. I mean...more so than usual. Buying government bonds down to -0.2%(or maybe even lower) seems to me to be the definition of financing through printing money, or monetizing the debt, more accurately.
Also crazy, Draghi & ECB comes out and says "we know there could be financial stability risks..." and "we don't know what happens with negative rates"
Even if you believed this QE to be necessary, I thought the point was to reduce volatility and risk. Not..."hmm, let's see if this breaks shit."
With negative interest , or just ridiculous low , there is no point in buying bonds ........PM is the way to go ..
hahahahahahahahahahahahahaha http://finviz.com/futures_charts.ashx?t=NG&p=m5
Negative interests for german bonds
http://investmentwatchblog.com/german-government-bond-market-foretelling...