First "Trump Ten-Year" Auction Is A Near Debacle: Tail Spikes, Bid To Cover Tumbles

Tyler Durden's picture

Well, if Trump really wants to blow out yields, he got a head start two months before he was even sworn in when moments ago the market threw up all over today's $23 billion in 10-Year paper, the first benchmark auction to price above 2% since January, and not only that but do so with one of the biggest "tails" on record, pricing at 2.02%, 1.6bps wide of the When Issued 2.004%. The internals were even more, ahem, deplorable, with the Bid to Cover tumbling from 2.53 in October to 2.22, the lowest since March 2009, as Indirects plunged from 62.7% to only 52.5%, the lowest since January 2015, and with Directs taking down just 8.3%, Dealers were stuck with 39.2% of the auction.

Overall, this was about as ugly an auction as we have seen in years, and if this is indicative of how the market will treat the Trump administration, we may find ourselves in an entirely new regime: one where the bond vigilantes take on not the Fed, but the president. Where have we seen that? Oh yes, in Italy in 2011. That particular episode resulted in the ouster of Berlusconi.

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LawsofPhysics's picture

The silent majority spoke...  now it's the money changers turn...

Again, a currency crisis is now inevitable.

Hedge accordingly.

froze25's picture

Harry Dent called this in the Boom Bust publication. Ticker symbol TBT

knukles's picture

How can this be the First Trump 10 Year Auction when he's not the fucking president, yet.
Fuck that.
It's Obama's Fault!

Mikeyy's picture

I can't tell if this is snark or if you're just an idiot.  Trump's platform called for dramatically lower taxes on individuals and corporations with no concomitant spending decreases.  Also, some sort of infrastructure spending.  As well as greater trade barriers.


These things are either inflationary or contribute to bigger deficits, thus higher interest rates.  I'm sorry if the facts don't comport with your worldview or politics, but markets don't care about what you think.

LawsofPhysics's picture

I think that he simply meant that Obama is in fact still the president, so this is an aution under HIS leadership.

barliman's picture

The older Tyler's feel compelled to employ a young SJW Tyler - maybe they get Federal funding for hiring a special needs person?

Business suggestion: Time to throw the special snowflakes to the wolves. Hard times are coming and no one needs to hear ANY SJW whining.

Doom Porn Star's picture

I don't see this as a direct response to Trump either..   If anything the markets are expressing their anger not at Trump but at the establishment which totally overplayed it's hand by fronting with the likes of Bushes and Clintons: and getting fucking trounced by the repulsed electorate for it.  

This is the establishment getting slapped.

TrajanOptimus's picture

What about anticipation of the Fed raising rates? Thats my guess.

Cursive's picture

You're right.  It's baked in the cake, there's no undoing it now.  Sooner or later....

LawsofPhysics's picture

How are things at the NSA troll?

Doom Porn Star's picture


This is another tightening mechnanism; but, it isn't specifically manged by the FED.

The fiscal/Treasury is leading here.

They are feeding the snake it's tail a bit faster than it would like.


IF the Primary Dealers and the FED stopped buying Treasuries a fiscal and political crisis would result.

The only way the Banks can continue to collect their vast ledgers of perpetual usury is to maintain a continuity of currency or translatable commonality of accounting that transcendes the currency.

LawsofPhysics's picture

"The only way the Banks can continue to collect their vast ledgers of perpetual usury is to maintain a continuity of currency or translatable commonality of accounting that transcendes the currency."

Correct, but the real resource requirement (something that cannot be created out of thin air) that must continue to be fed into the system in order to maintain the status quo, simply cannot be maintained.

As history shows time and time again, the people who control real productive capital and have the capacity to deliver real products will and already are demanding greater compensation.  Soon many will actually demand that trade deficits be settled in something REAL.

Doom Porn Star's picture

There are other remedies, painful though they will be..

Defaults on unpayable pensions and debts.  

Asset price reversions.  


IF I am going to trade what is REAL for something it isn't gonna be overpriced plastic and aluminum shit.

IMHO, the vast mjority of EQUIPMENT and PRODUCTS being foreign produced and imported do not actually merit trade in REAL money. 


LawsofPhysics's picture

What part of all fiat are going to zero don't you understand?

Urban Roman's picture

What is "accordingly"?

What is going to move, and in which direction? And when?

Urban Roman's picture

(and, relative to what other indication of purchasing power?)

Soph's picture

Heh, Trump's already a dog?

That was quick!

Absalon's picture

He was always a dog.

Yesterday the morons got to say "fuck you" to the elites.

Today the elites bite back.

Belrev's picture

Guillotines are a beautiful thing.

Quantum Bunk's picture

Not buying it.

Trump was a win in disguise for the Fed status quo. A phony dose of Regan Lite is just what the doctor ordered to buy some more time to pillage the word.

LawsofPhysics's picture

If true, then a significant debasing of the Federal Reserve Promissory Note must happen, and SOON.

Philo Beddoe's picture

Then again it would be nice to have a strong dollar to buy up EM assets on the cheap.  Rinse and repeat.  Since nobody is ever paying anybody back the guy with the most bombs get to keep all the toys. 

LawsofPhysics's picture

The is an optimistic outlook. Unfortunately the real resource requirements of the status quo/current system, especially for producers of tangible items, simply cannot be maintained.

All things being equal, paper "wealth" could explode as all of the underlying fiats are debased to zero...

Doom Porn Star's picture

The status quo is going to get shaken up.   Resources are going to be re-allocated.

Of course there will be further debasement.   The FED is designed to perpetually devalue via inflation.

The big question is where the defaults are going to be taken and how much bubble assets are allowed to deflate.

LawsofPhysics's picture

I predict that the global banks themselves will in fact write off all those derivatives and bad debt.  It will be a global agreement, then hyperinflation that may or may not be managable.

Look, its that or world war, period. (people simply enforce thier rule and TAKE what they want/need by force) There simply is no other option (baring fusion reactors coming online everywhere of course).

CheapBastard's picture

Deficits and debt are so enormous at this point that must devalue the dollar one way or the other so they pay back with cheaper money.

Bill of Rights's picture

Raise those rates Yellen ha ha ha

LawsofPhysics's picture

Well, she has some more room to do so right now.  For as long as it lasts anyway...

knukles's picture

I'm with you.  Nothing's changed.
Seems to me we been here done that already a whole buncha times.  And keep coming right back to .... we're still in a Liquidity Trap, Consumer after tax income sucks, oh, why do I even bother to list the stuff?

wisehiney's picture

One juicy bund/treasury spread.

Get paid to wait if necessary, though I doubt it.

Thirty year auction tomorrow will flip it?

ggm's picture

We're not Italy. Bond vigilantes have absolutely no power over a sovereign currency regime.

LawsofPhysics's picture

Bingo, currency crisis is now invitable...

C21's picture

Can someone please explain to me what exactly is going...? I trade options, I'm no expert on FX or bond markets but I know something is really off. If somebody could explain what's going on I would really appreciate it.



Absalon's picture

"I trade options, I'm no expert on FX or bond markets"


You need to stop trading options. 

Philo Beddoe's picture

LOL. Coffee spit out all over screen. 

C21's picture

Why I've had my best year by far buying Puts and going long PMs. I'm just asking for help or a little clarity...

knukles's picture

I'm OK with the stock market and gold responses.  With the FX.  What I cannot fathom is a 4 1/2 point sell off in the long guy today alone.
That's the piece that disconnects for me, meaning I don't know.
(Gallic shrug)

C21's picture

Can someone please explain to me what exactly is going...? I trade options, I'm no expert on FX or bond markets but I know something is really off. If somebody could explain what's going on I would really appreciate it.



Cursive's picture

I have no idea, but I'm guessing that we'll see some prop trading desks and hedgies carted out feet first in the next couple of weeks.

Omega_Man's picture

nobody knows what the hell is going on... so buy gold 

Cursive's picture

This means Gartman went all-in Treasuries yesterday, right?

Mark of Zerro's picture

Tyler tweeted this morning there was a rumor that Gartman was going long the market.  I literally opened a short immediately.



brushhog's picture

There are a few Soro's type cry babies that are going to make waves, but in the end they will settle down and act in their own self interest like they always do

Quinvarius's picture

Gold was forced all the way back down for today's close to assist the unprepared bankers.  It won't stay down this time either.  Bonds are saying get out of the USD. 

pcrs's picture

Isn't the bondvigilantes = the fed?

The only one buying bonds are the feds with their printing press and people anticipating that the fed will buy them from them soon.

Publicus's picture


bankbob's picture

In case you did not get the word - Zero Interest Rates are going away.