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Nothing "Schizophrenic" About Today's Abysmal 5 Year Auction
Yesterday, when observing the "schizophrenic" 2 Year auction we noted that despite deplorable fundamentals, the auction was a scorching success as a result of a dramatic technical short squeeze into the print, the result of a huge "super special" shortage in the repo market, where the paper was trading -2% or under. That led us to correctly predict that the paper would trade deeply through the When Issued, which it did by well over a basis point.
Today, however, when looking at the repo market ahead of the auction we found no such danger of a squeeze: the paper was barely negative in repo, and as recently as yesterday there was no difficulty in procuring 5 Years in repo (contrary to the ongoing shortage of 2 Years) which it appears was not a popular spot for shorting on the curve.
As a result, we were fully expecting not only a tail, but a whopping tail in today's weak market. And that is precisely what we got when moments after we learned that the When Issued was trading at 1.774% before the 1pm announcement, the 5 Year printed at 1.78%, a tail of 1.1 bps, a mirror image of yesterday's squeeze into the auction!
The bad news continued into the internals where like yesterday, the Bid to Cover plunged from 2.52 to 2.32. Like yesterday, this was the lowest BtC since July 2009. Indirects were awarded only 52.5% of the auction, far below the TTM average of 59.2%, while Dealers ended up with 36.5% of the auction as a result of the only silver lining in the auction, an unexpected pick up in the Direct take down to 11%, the highest since July 2014, in a partial carbon copy of yesterday's auction.
As a result of this weak auction, the entire curve has flattened even more, with the 2Y wider by 8 bps as the yield on the 30Y pushes higher by another 6.5bps.
Looking at the action in the past two days, some have wondered if this is not all just some sovereign wealth fund or a foreign reserve manager dumping US treasurys in the last few days of 2015 in order to obtain much needed US dollars ahead of the new year.
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"the entire curve has flattened even more" Huh? Looks steeper to me.
Two year notes aren't "wider," they can only only be wider against something. They're just "down." Which means they're up in yield. AND, they're not 8 basis points weaker. That 8 bps encompasses the roll from November two-year notes to December.
If ZH is gonna post on the bond market, they should find a Tyler who knows what he's talking about.
Amen.
if i had a dime for every day the NY FED's reverse repo increases from the day before and "coincidentally" yields go up, i would be with a hatful of dimes by now. i thought the collateral couldn't be rehypothecated...
then again, there are $270 billion in daily reverse repos with foreign central banks...
not corrupt
Wizards
Yes, I am what they call a wizard in the programming world, which is moving at quantum speed relative to the Fred and Wilma economy presented by the media, which the Fed is assigned to keep a lid on, with both monetary and labor, price and wage, control. You can see where this is going, and everyone was given notice.
Grace is a little wizard, by DNA. If the feminists and their politically correct man-servants really wanted what they said, they would be happy about the outcome, but instead they find themselves fighting and losing to a baby. Having brought out their entire technology toolkit at UCSF, with DNA analysis from UCSD, and help from my old schoolmates, they have failed to control her.
Grace decides what is going to be done and how it is going to be done. Pollyanna is the sugar, making the medicine go down, for the automatons. And yes, I am in the house of cards, in the dimension they see, but can still traverse it at will, and now you see the exit.
Always begin by building your own exit. Like Grace, I began building mine immediately, when my dad threw me into the black hole. No one is going to catch up to me in AI, but you are going to build your own exit, and there is no time like the present to begin.
Others do not define your labor, unless you choose to allow them, which you may or not want to do depending upon your relative position in the implosion/explosions of an implosion/explosion. My priorities are spouse, children and work, so government sets up on those priorities as a means of extortion, to maximize rent/income, as I fully expect. But as you can see, I only spend 10% of my time on that problem-solution, and the majority, tldr, cannot begin to scratch the surface of my consciousness, because it has nothing but redundant self-obsession to show for its efforts.
Your investment depends upon your priorities, which no one else is capable of understanding, unless you want to be popular. As a young person, just thinking about raising a family, you want to be looking at labor/rent distributions, how they are being affected on the margin, and how your particular participation will affect that outcome over time. If you are retired, your kids are gone, you live in Spokane, and you have an exit, Treasuries may make sense, but they certainly do not make sense in a big city like San Francisco or a small town like Mendocino, where rent/income is 2, with the associated taxes chasing real estate inflation in a positive feedback loop.
FANG is a black hole, but you can always adjust the implosion/explosion, at the right distance, for you. Collect the data yourself, and learn by doing. The Internet only tells you what others want you to know, which isn’t much.
Just a silly, stupid example to identify landlords posing as employers, which is the majority: Rent in town is $1000. An employer wants to hire you to dig 5 post holes in gravel, which with all the nonsense is going to take 15 hrs at $10/hr, $150. A motorized auger costs you $50 to rent, takes an hour to get and an hour to drill. You offer to do it at $50/hr, and get it on your own time, because you want to talk to the guy at the rent-all anyway, $100. The landlord will get upset that you offered.
It’s about your productive time, which grows the economy, not money, debt liquidating the economy. If you think about it, maximizing revenue increases rent/income, which is not in your interest, and what the stock market is all about, feeding the bond market, which feeds war, over falling living standards and increasing income inequality. Government is and always has been a myth, shared to grow scale, until it collapses.
As best I can tell, there are some points worth considering in this post -- next time, try writing in plain English.
Foreign Governments need U.S. Dollars to make sure all the underworld gets paid.Organised crime needs cashish.