This page has been archived and commenting is disabled.
Traders Are Panic-Selling T-Bills After Jack Lew Warns Of "Terrible" Debt Limit Accident
The one-month-ish Treasury Bills that mature November 18th are collapsing. Following comments this morning by Treasury Secretary Jack Lew that the US will run out of cash on November 3rd and his warning of a "terrible" debt limit accident, the 11/18/15 T-Bills have seen yields explode from -1bp to 7bps - an unprecedented 8bps spike as investors panic-sell beyond the deadline.
WI 1month bills are over 11bps!
"Our best estimate is November 3rd is when we'll exhaust what we call extraordinary measures; those are things we can do to manage things. I will run out of things that I can manage on November 3rd," Lew told CNBC's "Squawk Box."
Lew insisted that a hike is not a commitment to new spending but an ability to pay the bills on money already spent. Conservatives have in the past targeted the borrowing limit as leverage in budget negotiations.
Lew dismissed the idea that the government could prioritize what bills to pay. "Once you no longer consider all of your obligations rock solid, you're no longer the full faith and credit of the United States."
"It's also not possible to pick and choose. We have about 80 million transactions a month. Our system wasn't set up not to pay," he added.
So that leaves less then 2 weeks for the dysfunctional GOP to agree to a debt ceiling increase... is it any wonder that traders are dumping anything beyond Nov 3rd en masse...
As The Wall Street Journal adds,
A selloff that started on Friday in T-bills deepened on Monday, sending the yield on the bill maturing on Nov. 12 to the highest level since 2013, when last time the market was rattled by debt ceiling fear. Monday's selloff spread to all four bills maturing during the course of November.
Few expect US to default because debt ceiling is a political issue and investors have experienced such episodes in 2013 and 2011. Still, many cut exposure to bills maturing close to the deadline of debt-ceiling to avoid hassels, as suggested by bill yields in December and January that traded below those on November. The yield on the bill due on Nov. 12 was recently at 0.17%, vs Friday's closing level of 0.036% and 0.005% Thursday.
For now concerns about Lew's warning of a terrible debt accident are limited to the bond market. As we said over the weekend when noting the record negative 1 Year Japanese T-Bills, "this is happening while equities ignore absolutely everything taking place in the world and trade purely on technicals and "hope" for even more future liquidity flow out of central banks."
One hopes the republicans who need to quickly decide how they will extend the debt ceiling are as concerned about the T-Bill market as they have been about stocks, or else the market will need to stage a violent wake up call in the next 2 weeks to mirror what is already taking place with T-Bills.
* * *
We leave it to Barclays Joseph Abate to conclude:
"This is the beginning...Nervousness is ratcheting higher”
»
- 31390 reads
- Printer-friendly version
- Send to friend
- advertisements -
LOL - Lew you are such an amateur.
the guy and his boss are idiots - THINGS...
such a command of the English language -
... those are things we can do to manage things. I will run out of things that I can manage on November 3rd,"
What a joke. Why does the GOP even pretend to go for a balanced budget. It's not like we'll ever pay it back. When Putin can run a Military for 1/10 the price that the US does, at 50 Billion, Congress is still consumed in a dick measuring contest for ever larger Defense spending. Just keep raising the debt limit, whatever, but defund the EPA, DHS, Dept of Education, etc and show some balls already.
EVERYBODY do the two-step panic. It's all the rage these days.
There will be no default (nor is the spike in short end yields signaling default- it is signaling delayed payment). And, frankly, if rolling short term Treasuries is your gig, this would be the moment to go lever up about 10,000:1 and buy with both hands and both fee. There will not even be a DELAY in payment.
“Lew's warning of a terrible debt accident”
LMAO… Like he is going to say anything that Skynet isn’t waiting for and like the dishrags in the Congress won’t up the debt ceiling.
"So that leaves less then 2 weeks for the dysfunctional GOP to agree to a debt ceiling increase... is it any wonder that traders are dumping anything beyond Nov 3rd en masse..."
Meh, what CONgresscritter wouldn't vote themselves a raise - if they could?
This is al gore rhythm logic.
BINGO
Some traders will be making a killing
Farce to be continued...
"Yo dawg, I heard you like to manage things inside of your things, so I just put some more things to manage inside of your things."
#PimpMyBudget
"I like manage things, things like well, things, and if I can't manage those things well I'll like have nothing left to manage."
Didju all know that the US code makes no provisions for a cross default with Treasury debt?
Meaning that they could default upon some issues but others be still paying, legally.
Yes, an issue of quantum entanglement across cusips. Where are Krugman and Hawking? We must be led out of the darkness! Help us Obiewan!
One platinum coin coming up.
I suggest your avatar as the obverse, sir.
Thank you!
Would actually be appropriate irony, no?
Jack Lew - the invisible man.
DavidC
Real US debt is over $210 trillion per Kotlikoff. Why are they fighting over a fake debt ceiling which is under $20 trillion?
Because the sheep might notice, and we can't have any of that.......
Fake real debt, fake paper debt, fake stawk prices, fake swaps, fake derivatives, fake leveraged investing in fake investments, fake leveraged paper commodities, fake business, fake government, fake media.
Yeah, but the end result is real people gotta deal with the real aftermath.
Go long on rope, copper, lead, and brass.
and silver of course, you silly.
Also long crossbows, fishing gear, and mason jars
Call it the silicone titty economy......
Short ropes can be more effective. Depending on the lamp posts, that is;)
And dunking
She drowned, so she was innocent.
What also floats in water?
Very small rocks.
"Water? You mean like out the toilet?"
Churches?
. . . but at least she cleared her name. She should be glad of that.
So is this once again a big production to confuse us, or are they really gonna do it this time?
They won't until they do.
It is interesting that the House doesn't have a speaker yet. The infighting has been fierce. Was Boner kept around just to herd the cats to another debt ceiling adjustment?
They're not going to put out a warning if they're actually planning to default. This is just theater, as was said above, if levered short-term debt is your thing, buy those Nov 3+ issues with both hands.
Yikes. That's some pretty strong language. Me thinks shoe will drop soon.
Naw,That other shoe has an amazing "Hang Time"...i ain't falling for it,yet....
"Courage Mom" in morse code, in Wag the Dog
http://www.youtube.com/watch?v=1v4ZLwevXAI
Good Ol' Shoe"Extraordinary measures" become "extra-extraordinary measures", etc., etc......
Followed by double secret probation, and then followed by triple secret probation.....
Gotta free up more capital to BTFATH in FB.
Full faith and credit... p.s.: PRINT MOAR!
People will not take yet another debt "ceiling" increase without a crisis.
poof, crisis.
pods
Funny how that happens.
Fucking retards. You would think that people would understand the bread and circuses the debt ceiling "debate" is by now.
Yep...*YAAWWWN'.....how many times have we seen this play?
How many times have we had USN gunboat diplomacy coinciding with a debt limit 'debate'.
Almost like it was planned or something.
i used to like going to the theatre, no more.
Oh, you too, huh?
I have trouble watching anything out of Hollywierd anymore. The perceptions management, manipulation and propaganda is stifling.
Like what, the New Captain America fight Tea Partiers? Like WTF? All that good freedom of thought, religion, speech, etc. Yessiree Bob!
But then again, Winny, it does foreshadow official policy as it is the conditioning and preparation there for.
Indeed. Remove it all together and lets get the party started.
I still want to run for office and pledge to vote in favor of every spending bill that comes my way.
Defense? YES!
Welfare? YES!
Pork? YES!
Print? HELL YES!
I'll even wear a nice linen suit and a straw fedora to visually remind everyone we're in a banana republic.
Can we tailgate the debt limit deadline somewhere? I guess walmart is a bit more empty than normal and I hear they don't mind people camping in their lots at night.
Come on, of course everything will be just fine....the Wall of Worry is a downhill climb.
BULLISH!!!!
Pffff... What's the Monday Night matchup?
So phony. Lew and the magic negro trying to embarrass republicans
"Our best estimate is November 3rd is when we'll exhaust what we call extraordinary measures; those are things we can do to manage things. I will run out of things that I can manage on November 3rd,"
Well, start by firing 3/4 of government.
that would be a good start.
OH NO Panic! If we don't raise the debt limit, we'll go broke!
Uh, Asshole. You're already 200 Trillion in debt. You ARE broke! Congratulations. You've destroyed the greatest country ever. Well done, traitor.
Hey, you fucked up, you trusted us!
They have and the episodes were not nice. But what happens if they don't? What if it takes a few months? Is that priced in?
I'm gonna go out of a limb here and guess they are going to raise the debt ceiling right on schedule. Yeah crazy talk. I just have a hunch is all.
If we can't borrow 10% more from the unborn...
"his warning of a "terrible" debt limit accident"
~ Lew is trying to get people all worked up over the "debt ceiling" issue.
It will be raised of course, but he really wants is for the ceiling to be done away with, once for all!
Lew is a lying asshole like all the rest of his type.
"Lew is a lying asshole like all the rest of his type."
A politician by nature. What do you ecpect from Jack Jew?
I think you mean Lack Jew.
For a price, I'll back you.
I agree with him. Get rid of the ceiling. Print to infinity. Crash and burn. Reset and hang the bankers.
For the children.
New word: Prinfinity
You know what it means.
They US is already bankrupt. The problem is the rest of the world believes the financial wizard of oz.
Fake crisis...the usual propaganda designed to make paper money look real and big government seem somehow essential to life.
Kudos .... All Kabuki Theater
The only way to keep the government from not working is to spend more money to make it bigger so it works better.
Hell
give the Ds everything they want....at this point it won't matter. Might as well go down having fun....for a few weeks.
Yep, sick of the suffering and sacrifice. Burn it all down, the sooner the better.
the only "accident" would be to continue down this insane path of punting any & every issue down the road to the next guys administration so you can say you tripled the stock market under your watch. all these clowns are doing with this borrowing, debt, and deficits are pulling gains forward & fucking future generations of taxpayers, investors, etc.
ONLY viable solution IMO would be to default on the debt OR restructure with an iron-clad plan to pay the reduced principal back inside say a 5-10 year period ... institute a balanced budget ammendment ... END all forms of treasury offerings forever (since we've shown we clearly cannot be trusted to take-on debt in a responsible manner, specifically due to the pandering to any one particular voter base that if you can't change the tax law, you'll just borrow $$$ to spend on your agenda.
well, thats where id start. but thats just me.
I thought they declared any kind of debt ceiling limits to be domestic terrorism?
"You'll hear the printing presses from Mars." - Marc Faber
Nah, they ain't gonna default. Not gonna happen. They'll stop paying bills, salaries, etc., before they do that.
2 things Must Not Be Fucked With.
EBT and interest payments, or then it all is well and truly over for the Grand Oligarchy's Rape and Pillaging of the System.
Huh?!!! The FF target is 0-25bp. And 11bpd is a panic level? bwahahahahahahahahahahahhahaahahahahahahahahahahahahahahahahahahahhahahahaah
I wish the panic was sufficient to drive the yield to 100bp! Now THAT would be a panic!
Mad? Yes, I'm mad. But I have tenure.
Psychologically NO ONE wants to be the person blamed for this crap collapsing. There are plenty of people to blame but the person who holds the last straw will be known forever in history. Better to keep this offshore - Russia for meddling in Ukraine, Syria or China for building great sandy runways in the south Pacific.
They still are not paying lotto winners who have won in excess of $600 in Illinoik. If that isn't a sign things are extremely fucked up, well, get me my glasses.
How to tell if the USA is approaching a real financial crisis: Gold will be up everyday for awhile. There will be several fifty or a hundred dollar moves to the upside. The dollar will be crashing. Interest rates will spike significantly higher. Stocks will crash. Gold will correct lower. Then interest rates will plunge and gold will enter a major bull market. That's my general model of a crash scenario but there are many variations on that theme that might unfold in real time.
People often warn against saying, "It's different this time." Fact is, though, every time is different. Nothing is ever the same in this life from one day to the next. If you think that is wrong, look deeper...
So, will Jack Lew warn of martial law if the debt ceiling isn't raised? It's an echo of Hank Paulson's fakeout.
Jack should spare us the cheap theatrics.
Endless war preached by the NEOCONS has got bankrupt Washington running for cover.If the Fed pushes up interest rates even just a quarter the war mongers like McCain are going to be hotter than hell.
Yawn. Does anyone really think the GOP will NOT cave and agree to whatever Obama asks? Seriously..
Few can contemplate the meaning of this development in the treasury market while the 2016 election cycle is ramping up. But the next administration is fu-kacked.
8 basis points is hardly a sky is falling scenario, but hope springs eternal lol. Wake me up when it is 200.
I blame Rand Paul, because.
serious ?: what happens if we hit the ceiling & simply ignore it? it's not like bho has shown any more respect for rule of law than his predecessor & that's a pretty damn low bar to clear (in fact it's a pretty hard bar to limbo UNDER!). remember the (in)famous al gore quote about "no controlling legal authority"? well, who other than bho himeslf has the authority to make treasury do/not do anything?!? (well, yes, blankfein but that's a given) any legal action would take years & even IF scotus had the spine to tell them no (which I doubt they would) by that point the precedent would be firmly in place.
is this really that unlikely a scenario?
Holding debt payments hostage for their pet issues is beyond stupid. Like as if it were a tactic designed to fail.
The Republi-turds could just vote to defund ObamaDon'tCare or Planned Parenthood or whatever, and let Obongo veto it. Then they'd be on the record having done what they could do, and would have more ammo for the next election. Democracy at work.
Or since holding default over the country's head has proven unpopular, they could up the ante. I'm thinking, acquire a rescue dog, put it on a pedestal at a press conference, and put a gun to its head.
"If you don't sign off on our bill Mr. President, the dog gets it. In three... Two... One..."
https://jasoneldersblog.files.wordpress.com/2011/12/dog-gun.jpg
The politics of fear never seem to end!
Debt expansion is built-in to the design of the Federal Reserve Dollar monetary system.
When DEBT-FACE-VALUE = PRINTED DOLLARS, there can never be enough DOLLARs to pay both that face value and the interest it bears.
Instead must be ROLLED-OVER IN A LARGER DENOMINATION... or the debt must be written down in value to equal the number of dollars remaining after past interest payments were made, and then retired...leading to monetary and price deflation. That is kryptonite for the Federal Reserve System, because then the Fed's other similar debts would also have to be written down...which would evaporate a similar amount of currency such that it will be even MORE impaired at maturity, ad infinitem...and around we go until the Federal Reserve Note joins the Civil |War Era 'Greenback' and/or the 'Continental' in the annals of worthless paper bearing politicians' portraits.
This is why price inflation, since 1914, has been CONSTANT.
This is why government debt only increases, no matter what they may tell you.
This is why the 'debt limit' debate is meaningless.
The 'debt-limit' debate presumes that we have a government-neutral currency in which we balance revenues with expenditures.
We don't. It doesn't exist.
Instead the Gov't and Federal Reserve balance maturing debt with monetary aggregates. The Congress MUST SPEND whatever is required or Debt explodes, the dollar evaporates, and the international monetary system collapses from contagion, and we have a once-in every few thousand years civilizational collapse of trade.
Sorry Congress.
When you surrendered currency management, which was Constitutionally apportioned to you, you also surrendered the power of the Purse. At most you may decide whom to benefit with your largesse...which is why Washington works the way it does, not because of any "Corporation as legal person", "Election Reform", or any other issue one can imagine.
about helicopter money: can't they drop it over the white house?
"Buy what everyone else is selling". Where have I heard that before.....Anyway, of course the GOP will vote for a raising of the debt limit, they do every year {after there grand theater act of being fiscal conservatives}. There are no more conservative anything anymore.
I HAD A TERRIBLE ACCIDENT, SIR!
Is it time for this drama again?
Why don't they just set the debt level at infinity and be done with it?
We've all seen this show before. We all know how it goes and how it ends. Why bother?
The theater keeps the audience believing the fiction is real.
This Lien is probably not helping Lew & Co.:
https://s3.amazonaws.com/khudes/scan0013.pdf
who gives a shit. the fed will continue to buy tbills forever, print for the big banks on their derivatives exposure, print print print(electronically also). the only news we need to wait for now is countries not accepting US dollars for trade (including the vassals). that's when the gig is up, and the greatest depression the world has ever seen will be upon us. please, all you people out there, keep an updated address list of all central bankers, and the big 6 banks leaders, and once it hits, go to your preferred banksters house, and kill the fuckers slowly.