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Shorts Burned By Latest Unexpectedly Strong 2-Year Treasury Auction
For all the talk about rate hikes, the bond market seems to be completely oblivious to any threats of an imminent start of tightening by the Fed, and in the just concluded 2 Year auction, the Treasury moments ago sold $26 billion in 2 Year paper at a high yield of 0.598%, pricing through the When Issued of 0.601% and tight of last month's 0.603%. While the yield dipped following the recent relapse of the US economy into a growth rate just above contraction, the Bid to Cover rose from 3.45% to 3.46%, perhaps driven by a jump in Direct take down, which allotted Direct dealers 18.3% of the final paper, Indirects holding 45.7% and Dealers left with just 36% of the auction, the lowest Direct takedown since October 2012.
Overall, a surprisingly solid auction, and the short-covering in the short-end after the announcement merely confirmed that the market was once again positioned incorrectly, and hoping for another weak bond auction which just refuses to come.
Yields are being squeezed lower post-auction...
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Why would this be a surprise to anyone? Fed prints free money, and will continue to do so until long after we're all turned to dust or vaporized.
And it's fucking Mario and da boyz.
OFUK
long TLT and SPXU
Bonds figured out that the Fed intends on tightening one basis point per meeting.
Treasuries are simply following Euro sovereigns - Down Down, Baby
The Fed prints the money and buys through the banks, Belgium or anywhere else they want.
The promoter of infinite debt.
It's why Cheny said deficits didn't matter.
Bernanke was at the Fed during that time. It's hard to believe it would become this outrageous.
correct, now maintaining control of all those paper claims on real goods and services is another thing altogether, hence the REPO and reverse-REPO scam...
Some folks got squeezed.
Damn! You mean there are still bears out there to be fleeced? Holy smokes, I was certain they were all killed off years ago.
Here's the pattern: Data comes out showing the markets are fucked beyond belief. Shorts take positions based on said data. Fed then comes in, floods markets with gigatons of free money, and the shorts are all fleeced and hung out to dry. Lather, rinse, and repeat.
yes.....and many of us sit on the sidelines going "damn, they can't keep doing that forever".
<i believe we are called suckers. hold on, i gotta double up for tomorrow.....>
yes, yes, "completely unforseen", I am sure that "rates will go up soon"...
How will the market respond IF interest rates move up sooner but by incremental rate increases like 1/16 or 1/8 increases?This might happen and very gradually and very sloooowly.