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Central Banks Drop An Anvil On Bond Shorts In Today's 3 Year Auction

Tyler Durden's picture




 

Earlier today, there was once again a massive scarcity of 3 Year underlying paper, when as the SMRA charts below show, the bond was trading the most negative in repo it has been since September: at a -1.68% rate, everyone was rushing to short ahead of today's 3 Year auction.

 

Then, with the latest tumble in rates, absolutely, everyone was convinced shorting today's 3 Year auction would be easy money.

And then the central banks showed up, in the form of a whopping 52.7% in Indirect takedown in the just concluded auction of $24 billion in 3 Years, which also was the highest indirect bid since December 2009.

End result: a high yield of precisely 1.000%, stopping through the 1.009% When Issued, and an auction which paradoxically was saved by the foreign central banks themselves (i.e., Indirects), with the shorts left cursing, among which perhaps the Fed itself.

The good news: since there is once again a bid for paper, stocks just turned green.

 

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Tue, 05/12/2015 - 13:24 | 6085523 Bumpo
Bumpo's picture

At least in a Casino you know that odds going in

Tue, 05/12/2015 - 13:39 | 6085599 The Limerick King
The Limerick King's picture

 

 

Bond shorts got hammered today
As banksters decided to pay
A dangerous game
The outcome's the same
When printers are willing to play

Tue, 05/12/2015 - 13:27 | 6085550 madbraz
madbraz's picture

they ran up yields by 40 basis points in two weeks over horrible economic data - why on earth wouldn't you just exit the position at a lofty (undeserved) profit?

Tue, 05/12/2015 - 14:05 | 6085702 farmboy
farmboy's picture

Rates must rise to show confidence but preferably not more then 0,12233 % on the whole curve otherwise there is no money left to fund Ukranian Nazi's.

Tue, 05/12/2015 - 14:49 | 6085868 Conax
Conax's picture

These paper hustlers just got a little taste of what the PM crowd eats every day.

Don't squeal little piggies, you admire these assholes, remember?

 

Tue, 05/12/2015 - 15:30 | 6086141 F22
F22's picture

I'm not sure what you mean by "a little taste of what the PM crowd eats every day."

If you own physical precious metals, the number of ounces doesn't change....a lower price is merely an opportunity to acquire more and

thereby protect your wealth.

Did you mean paper gold?  That's not really gold you know......

Tue, 05/12/2015 - 15:12 | 6086030 disabledvet
disabledvet's picture

If Greece means fear of contagion why am I shorting treasuries again?

Slowdown in China? Check that one off the list as well.

Still no recovery in USA and a free trade agreement on tap.

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