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Unmasking Of "Mystery Treasury Buyer" Has No Impact On "Uneventful" 3 Year Auction
If there were any concerns that today's revelation that Element Capital had been the "mysterious" seller of US Treasurys would for some reason shove a spike through the spokes of Treasury auctions, these were unconfirmed at least according to the just completed 3 Year auction, which priced at 1.056%, 0.1 bps through the When Issued 1.057%, if the highest pricing yield since June's 1.125%. Curiously, the auction was well-bid even though the repo rate first thing this morning on the 3Y Off The Run was a decent 0.12%, with the only shortage evident in the 10Y which was again trading special at -0.95% if better than last Wednesday's -2.30%, suggesting there are ongoing disturbance in the repo market.
Charts: Stone McCarthy
The internals of the auction were solid if not groundbreaking: the Bid to Cover was 3.233, fractionally below the TTM average of 3.286, the Dealer take down of 41% was the highest since February, while Indirects ended up withe 51% of the takedown, above the 45.7% TTM average. Finally, Directs were awarded just 8.0% of the auction matching the lowest since February.
In short: a perfectly average auction, one which did not attract particular attention for any one reason. Which is why, tomorrow's 10Y auction will be far more closely watched.
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Here's the question I have.
So... who exactly is buying these "when issued" contracts that Talpins is selling? K-Hen?
I'm no finance whiz, but I'm thinking that's kind of important, as don't they end up being the true Treasury holder once Talpins closes his short?
Hold on, I thought Talpins was the "mysterious buyer", WTF?
Ahh, it's all bullshit anyway.
Supposedly, he's buying Treasurys in order to close out his previous "when issued" short so he can take profits from his arb.
Step right up and BTFD before you miss your chance. WWIII has started. The world is going to end. Don't miss out on this opportunity of a lifetime.
Anyone interested in what is about to happen to this society. Head over to ClubOrlov and the latest post argues succinctly what will transpire.
We are fooked.
That is a whole lot of mental masterbation. Allow me to simplify; that which cannot be sustained, won't be.