CME Celebrates America's Ever Nearer Date With Insolvency By Raising Collateral Haircut On Treasurys

Tyler Durden's picture

We just heard two very useless speeches by two very useless Wall Street muppets. Both were, naturally, completely irrelevant. Now comes the important stuff, courtesy of a press release a few hours ago from the CME. Up until today, the collateral haircut on a T-Bill was 0.0%. Beginning Thursday it will be 0.5%. All other classes of Bonds, Notes and Strips will see their haircuts raised by 1% across the board. Same with Agency debt. Only foreign debt will see an increase of 2% in the Bill space, and 0.5% in Notes and Bonds. Translation: the CME just telegraphed what the rating agencies are terrified to do - keep up the charade, and the haircut will keep rising by 1% until it hits 100%. Give or take.

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Cleanclog's picture

Agree with CME on Treas. haircuts.

Once there are APPL futures, will those AAA+++s be without haircuts?  Seems it's the best quality "paper" in town.  Apple is the flight to quality name now.

Oh wait - Apple has no debt.  No bonds.  No wonder it's going stratospheric.

Infinite QE's picture

Apple needs to be coerced into becoming a bank

AldousHuxley's picture

Apples needs money to build spaceship. real estate investment when it bottoms.

Steve Jobs at Cupertino City Council meeting

camoes's picture

Damn you Blyhe and JP Morgue!!! Manipulators!!! I'm gonna write to CFTC...oh wait, I thought they were raising margins on silver...carry on! #WINNING

Hearst's picture

Well they're not dropping the margins on Silver either.  And I'm bettin the CME isn't about to anytime soon.

Subprime JD's picture

Please elaborate on this haircuts concept. Thanks

max2205's picture

It's all a bag of suck

caerus's picture

fuck it let's go 100% margin on all asset classes and last man standing wins

Thomas Jefferson's picture

This is some quality doom porn.

RobotTrader's picture

Probably because there are huge amounts of shorts in the Treasury market and they want to avoid a disorderly meltup if a deal gets signed.

Bill Gross must have some itchy hands right now, losing so much on those big T-Bone shorts.

Waiting for the bond market crash that never seems to happen.

10-yr. yield at 3.00% right now, I want to see 5% to quash some of this speculation in commodities and stocks.

We desperately need a 10% - 15% correction.

ThirdCoastSurfer's picture

"We desperately need a 10% - 15% correction."


How can they not know from history that such a correction is healthy, it is needed, that the longer it is prevented the more dangerous it becomes?  Three 7%'ers in a  correction from the 666 bottom just doesn't cut it.

It's just like the savings rate in America. A certain amount of both money and stocks need to move, to be exchanged in a health economy. Maybe too many have now moved and parked their once stagnant money into now stagnant stocks. There are more hedge funds than stock listings and a sell-off is needed just to pay the salaries and keep the lights on and I just can't see how it's gone on this long without a real correction or how this can go on for much longer. It's the story of the pied piper leading the rats to the river. 

PS: Anyone else notice that the bail out bill for the FDIC is now over $1 billion for just the month of July? 

darkstar7646's picture

I don't think you get the idea of a 10-15% correction.

It might start there, but the explosion of what happens next (on a number of different fronts) will make it MUCH larger.

Can you say, "No school", "No travel", and "FEMA camps"?

Thomas Jefferson's picture

Bearish on bonds.  Bullish on real money!

Everyman's picture

Doesn't this mean that ALL equities need to go up 5% in value just to stay par?

buzzsaw99's picture

I wonder how many levered hogs get slaughtered up there every day. More than at the stockyard I'm guessing.

caerus's picture

at least they haven't lowered reqs on ag

chump666's picture

haha, doesn't even matter what Obama does or they other dude, point is UST's are heading for a downgrade.  So you got a partial default sitting there like Greece sans the ECB, IMF, EU print job.

All markets looking crazy, on FX EUR went silly on stop loss HFT close prices.  Check the AUD too.  As for oil, boom.


Bindar Dundat's picture

Is it my system or has this site slowed down since the revamp?

Global Hunter's picture

i am experiencing the same thing

notRobot's picture

Yes. Site is way slower. 

JR's picture

All investments are speculations in the age of paper money... All is not right with the world.

ATrillionSavedIsATrillionEarned's picture

Total derivatives collateralized by T-bills = $1e15 ( 1 Quadrillion for the sake of discussion )

Collateral required 1% ( sake of discussion ) = $10 Trillion

CME makes 0.5% margin call = $50 billion more needed.

I am on to something?


zorba THE GREEK's picture

The rating agencies can't cut U.S. debt rating without exposing themselves to gov. retribution. I think most people

on this site realize this now. So I think they should raise U.S. debt to AAAA or AAAAA. That way they could bring

attention to the fact that U.S. debt ratings by U.S. companies are irrelevant. Maybe then the pols would concentrate

on solving the real problems such as : gov. overspending and unemployment. When is someone in Washington going

to grow a set of balls and call this debt ceiling fiasco theatrical bullshit what it is? (besides Ron Paul, of course)

And when are the American people going to do the same. I guess if the SS checks don't go out on Aug 3, we will 

hear from a few million vocal citizens. (56 million)  If these jokers in D.C. let it go that far, they will all be voted

out of office, regardless of party, come the next election.

darkstar7646's picture

If the August 3 checks are not honored, forget the "next election" -- you'd need a new Census first after the blood drains from the streets.

I know people who might go violent about 8 AM on 8/3, even if they have money saved up for the process.

AldousHuxley's picture
Debt Ceiling Fight Is Fake


I predict cut in middle class services to pay for war in Iran and bankster bailouts. This is just to prep citizens to accept it without a riot.

AldousHuxley's picture

WHy politicians can't cut spending:


If you don't have a lobbyst representing your interests in DC, you are the one who is getting the shaft.

swissinv's picture

This is a very dangerous development - world wide collateral call mess

Peter K's picture

Ah yes, when all else fails, there's always the false equivalency schtik ;)

Urban Redneck's picture

A few years back the shadow banking system started applying haircuts to another popular form of collateral, and that had some rather profound consequences on the regulated credit markets.  But then Barney and Frank and Chris Dodd saved the global financial system with about a thousand pages of their infinite wisdom... Somehow their infinite wisdom discounted the possibility of the exact same thing happening again, or perhaps the fucktards didn't have the slightest idea what had happened or what they were doing.

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