Is Bond Market Whispering Inflation As 3 Year TSY Prices At Highest Yield Since October?

Tyler Durden's picture


The jump in yield from 0.347% to 0.456% may not sound like much, but that is what just happened following the pricing of the latest $32 billion in 3 Year paper, which came at the highest rate since October's 0.544%. And considering that anything under 3 years is virtually risk free courtesy of ZIRP, this move is actually far more pronounced than it appears on the surface. Also, that the auction closed with a 0.1 bps tail is hardly too notable, although it does show that gradually interest for short-term paper may be decreasing as the Fed may be forced to not only not do QE if inflation courtesy of all the other central banks persists, but have to shorten its ZIRP through 2014 forecast. Auction internals were broadly in line, with a 3.436 Bid to Cover coming in slightly above the LTM average of 3.356. Dealers took down 56.5% of the auction, with Indirects holding 34.6% and Directs left with 8.9%. So the questions begin: is this the auction that heralds concerns of imminent inflation through the bond market (sending the 10 Year lower), and is this ultimately the market negative event, because while stocks may be pushing higher on the rotation out of bonds, all this means is that there will be no more easing for a long time. 

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Mon, 03/12/2012 - 13:43 | 2247753 LongSoupLine
LongSoupLine's picture

I don't trust what the bond market whispers...only when it screams.

Mon, 03/12/2012 - 13:50 | 2247782 Stanwick
Stanwick's picture

Explains why gold is selling off like a italian Cruiseliner

Mon, 03/12/2012 - 13:53 | 2247785 LowProfile
LowProfile's picture

Dollarz, bitchez!!!

...For the moment...

Mon, 03/12/2012 - 14:04 | 2247810 resurger
resurger's picture

 i would say SALE :)

Mon, 03/12/2012 - 13:43 | 2247755 slewie the pi-rat
slewie the pi-rat's picture

we'll just hafta wait & see (direct quote from my mom)

Mon, 03/12/2012 - 14:14 | 2247853 Troll Magnet
Troll Magnet's picture

mom quotes get automatic upticks.  here's what my mom always says when she sees me:

mom: have you lost weight?  you look skinny!  are you eating well?

me: ma, i've gained 10 lbs since i saw you last time.

mom: well, you look skinny!  are you eating well?

Mon, 03/12/2012 - 15:59 | 2248211 HD
HD's picture

Slewie - could you get your mom to talk to Ben's mom about him manipulating the global financial markets?  He's being a bully and it's gonna go on his permanent record.


Mon, 03/12/2012 - 13:44 | 2247758 Sutton
Sutton's picture

"I will simply buy every 3 year that is for sale. End of story."

BS Bernanke

Mon, 03/12/2012 - 13:44 | 2247759 Dr. Engali
Dr. Engali's picture

Until the bond market can break the fed's grip I don't trust anything it says.

Mon, 03/12/2012 - 14:01 | 2247801 taraxias
taraxias's picture

The bond market now IS the FED, so a bit of an oxymoron there.

Mon, 03/12/2012 - 14:03 | 2247809 Dr. Engali
Dr. Engali's picture


Mon, 03/12/2012 - 13:44 | 2247760 Hansel
Hansel's picture

PIMCO troll Bill Gross just twatted:

Gross: Expect no news from Fed 2morrow but April meeting holds promise for a QE3. must keep buying bonds that the market doesn’t want.

QE3, the rich man's welfare.

Mon, 03/12/2012 - 13:48 | 2247775 Shizzmoney
Shizzmoney's picture

QE3, the rich man's welfare.

Candidate for Post of the Year

Mon, 03/12/2012 - 13:56 | 2247788 LowProfile
LowProfile's picture

Vote this up because you can't vote his up (Tyler, will you get someone to fix that italics in the first line preventing voting up/down bug?  ktnxbai)

Mon, 03/12/2012 - 13:49 | 2247777 LawsofPhysics
LawsofPhysics's picture

Well duh. Lots of PDs and government trolls talking about mortgage relief.  Is Bill the fed's own straw man?  place your bets.

Mon, 03/12/2012 - 13:49 | 2247780 GeneMarchbanks
GeneMarchbanks's picture

Twatting is something else, ain't it? Anygay, this is all just sooo pathetic now...

Mon, 03/12/2012 - 13:56 | 2247792 resurger
resurger's picture

so no "Sterilized" QE!!

I would be fucking shocked if he announces that! REally


Mon, 03/12/2012 - 14:31 | 2247919 toadold
toadold's picture

Hmmm, similar to "Groupon, food stamps for the middle class."

Mon, 03/12/2012 - 15:16 | 2248090 Lost Wages
Lost Wages's picture

In Gross's case he runs the largest mutual fund (PTTRX) in which a lot of 401K and pension money is held. So it's a bailout for all those people too. Can only hope the bubble holds until all those people get fired and cash out their 401Ks.

Mon, 03/12/2012 - 13:52 | 2247770 LawsofPhysics
LawsofPhysics's picture

Maybe, just maybe, the true cost for creating capital will come through?  Wishful thinking.  Ben can fix it "in fifteen minutes".

  When the primary dealers are taking it all down and the yellow line goes back up, then you can sweat.

Mon, 03/12/2012 - 13:47 | 2247774 Ted Baker
Ted Baker's picture


Mon, 03/12/2012 - 13:50 | 2247781 LongSoupLine
LongSoupLine's picture

whoa...calm down Ted.

Mon, 03/12/2012 - 14:08 | 2247829 SheepDog-One
SheepDog-One's picture

LOL whatever Ted....same old BS 'money printing' talk for over a year.

Mon, 03/12/2012 - 14:14 | 2247851 Tsar Pointless
Tsar Pointless's picture


Ted, there is no *physical* money printing going on. It's all digi-dollars - just numbers on a computer screen.

No trees are being harmed in the production of this hyper-inflationary dollar destruction. Viewer discretion, however, is advised.

Mon, 03/12/2012 - 13:56 | 2247791 bugs_
bugs_'s picture

another reason for shorter rates to start clicking up is that the long awaited recovery has finally begun.  we've been slammed with inflation for years and rates didn't do squat.  credit quality worries - ditto.  maybe something else is being whispered by this blip.

Mon, 03/12/2012 - 14:00 | 2247798 crawl
crawl's picture

Anything to keep financial markets riding the escalator upwards. The new goal must be to inflate the ES 5 points a day, on average.

Maybe by QE10, we will be multi-millionaires. And can't afford a loaf of bread.

Mon, 03/12/2012 - 14:05 | 2247811 taraxias
taraxias's picture

You nailed it. It's all about floating the market higher, everything else is noise.

Mon, 03/12/2012 - 14:11 | 2247832 SheepDog-One
SheepDog-One's picture

Funny part will be when it sinks in 1 morning that there will be no more money printing,  'floating the market higher' is totaly pointless and doesnt gain anyone a thing.....may as well just be a big circlejerk.

Mon, 03/12/2012 - 14:11 | 2247838 Tsar Pointless
Tsar Pointless's picture

You betcha-wetcha! And pointless is my name-o!

Because, everybody and their idiot brother is now convinced that the markets ARE the economy. If the stock markets are going up, that must mean the economy is looking up. We can yell and scream to the contrary, but four years in to this mess, if people aren't going to listen by now, they're not going to listen. Ever. Not even when it's too late.

Mon, 03/12/2012 - 14:13 | 2247846 SheepDog-One
SheepDog-One's picture

Yea, a lot of people ARE morons like you say, and instead of being gifted with free money as everyone inspected theyll be suddenly left without a cent. Anypne who thinks the centra FED banksters are working for them deserves what theyll be getting soon. A big kornholing.

Mon, 03/12/2012 - 14:04 | 2247800 slewie the pi-rat
slewie the pi-rat's picture

The Tripoli Post - Libya News and Business

US Soldier on Gun Rampage Kills 16 in Afghan Village

Mon, 03/12/2012 - 14:07 | 2247826 aztec two step
aztec two step's picture

Nope. It is signalling bloated dealer positions in the front end and an elevated repo rate.

Mon, 03/12/2012 - 14:13 | 2247849 Sophist Economicus
Sophist Economicus's picture

BINGO!   If I actually speculated in the bond market, I'd buy here and watch the rate get driven down by the FED.    There is no risk of rates getting out of control in the short to mid-run.   The gubbermint has it locked with its henchmen, the FED

Mon, 03/12/2012 - 14:55 | 2248024 pebblewriter
pebblewriter's picture

Higher rates/inflation/deficits -- I can't think of a better time for Tsy to introduce floating rate notes.

Mon, 03/12/2012 - 15:42 | 2248173 jimmyjames
jimmyjames's picture

I doubt the bond markets are signalling inflation but instead-a new risk-there has to be a ripple of fear running through all of them after the friday rule change in Greece-

Tue, 03/13/2012 - 02:14 | 2249677 cnhedge
cnhedge's picture

indeed, too early for liquidity extraction is not good.

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