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Investor Demand Soars For German 5 Year Paper As Germany Refutes FT Rumor, Lofty Summit Expectations
Following late November's disastrous 10 year Bund auction, in which the goal seekers saw everything from a failure of the repo market to the Bundesbank trying to fail the auction on purpose, yet which was nothing more than a simple case of little demand and high supply, today, following a steady leak wider in yields in the entire bund curve, Germany sold €4.09 billion in 1.25% 5 year bonds, with the maximum amount of €5 billion selling easily following bids for a total of €8.67 billion. The Buba retained €0.91 billion, which it always does, and is not an indication of some ulterior motive to have the ECB bailout Europe. As expected the Bid To Cover was a soaring 2.1x compared to 1.5x on the last 5 year auction on November 2. In other words, a stunning success and demonstrating what happens when you actually have demand for paper following a decline in prices. Below are the Wall Street responses to this strong auction. So that takes care of that. What is more important, and why futures are down is that as expected, yesterday's deux ex FT was promptly denied by Germany after a "senior German official" spoke to Reuters and said they are "not sure if summit will reach conclusion on using IMF funds in eurozone crisis" and "can't forsee running EFSF and ESM simultaneously". They have also said they are "more pessimistic than last week on overall summit deal". In other words, look for many moresuccessful Bund auctions as things resume their downward trajectory all over again.
Response to 5 year Bund Auction
NICK STAMENKOVIC, BOND STRATEGIST, RIA CAPITAL MARKETS, EDINBURGH
"There was strong demand, it was well-received, there will be a lot of relief after the poorly received action last week. Yields have cheapened quite a bit since the last 10-year auction, and that must have encouraged investors.
"The bid-to-cover ratio is pretty healthy and we saw strong investor demand, so there's been a positive reaction from the bond market."
"(Today's auction) suggests that the market may have overreacted to the last auction a little bit because people seemed to suggest that it was a sign of souring sentiment for German bonds alongside periphery bonds. But today's auction suggests that investor demand for German government bonds, certainly in the short term, remains quite strong."
MICHAEL LEISTER, RATE STRATEGIST, WESTLB, DUESSELDORF
"The cover of 2.1 is actually the highest for a five-year sale this quarter ... also the pricing indicators look very healthy so they didn't give it away for free."
"Overall there is a positive reaction across the board, we see the Bund future jumping. It comes as quite a relief, because what happened two weeks ago was still very much on everyone's mind."
"Within the five-year segment this bond actually looks quite cheap, some of the investors may have said 'OK, we've seen quite a selloff over the last couple of weeks and this may be attractive."
"It has cleared the way for a successful summit."
GERMAN FINANCE AGENCY
"Today's tender reflects volatile and uncertain market conditions. Investors are looking for, and trust, the quality of the paper from the euro zone's benchmark issuer."
PETER CHATWELL, RATE STRATEGIST, CREDIT AGRICOLE CIB
"It is a good result, well covered with 8.6 billion euros of bids for 5 billion euros of paper. With this being the final tap of the line, and the second last German auction of the year, it was always going to be far less difficult to place than the launch of Bund Jan-22, but nevertheless a decent auction."
ANNALISA PIAZZA, MARKET ECONOMIST, NEWEDGE STRATEGY
"Today's five-year German auction received very solid demand...Valuations were mixed ahead of the tap and the outcome difficult to predict as uncertainties about the future of the euro are still high. Demand might have been supported by the recent tightening in cross-country spreads and the cheapness of the line versus previous rolls.
MARC OSTWALD, STRATEGIST, MONUMENT SECURITIES, LONDON
"Very good. Very solid cover whatever metric one uses. Extraordinarily tightly bid ... Clearly the fact that we are selling above 1 percent does help.
"Given the concession that we've had over the last couple of weeks built into Bobl and Bund yields across the curve, I am not so surprised."
"This is at the very longest end of what is typically bought for bank capital. So the banks tend to have government bond paper which is up to 5 years in maturity and not beyond, and this would fall into that category."
MARKET REACTION:
- Bund future up 21 ticks at 134.99 vs 134.61 before auction
- Five-year German government bond yields 3 basis points lower at 1.07 percent versus 1.12 percent before auction.
BACKGROUND:
- Average bid/cover at five-year German auctions this year has been 1.55, average yields 2.049 percent and average retention 18.86 percent, according to Reuters data.
- Wednesday's auction came after a "disastrous" sale of 10-year bonds in November -- one of several sales that have been technically uncovered recently -- where the low yields on offer saw just 60 percent of the paper on offer placed with investors, the lowest percentage since at least 1999.
Source: RTRS
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Not to Worry, The Fed will buy it.
May vee buy your paper plees?
Hallo Sir, do not joke, wee speak werry good ze English!
are there any other important EURO meets other than this weekend's meeting this month
Yeap , they planned to accounce a plan for the meeting in wchich thay planned to present a plan to have a plan to make a plan of the plan
didn't You know ?
excuse my english
Nie ma za co:)
Maybe my boobs are so Polished :)
Polish boobs or German Buns, Bunts or Bunds, no difference to me. Now, if they would be really soft, like those 2-play soft tissues, I'd get some, too.
Friday is the End of it supposedly. Greece is excepting austerity, like before. Goldman's guy is in charge of Italy.
And we will have confirmed the Bazooka is the FED. (Sarc......LOL) Maybe, I should not be laughing.
They expect us to cry for they stupidity ?
no way bitchezz
A na drzewach zamiast li?ci b?d? wisie? finansi?ci (in polish "There will be a lot of finansisct hanging on the trees instead of leaves")
excuse my english
Well, your english could use a little work, but your Polish is fine.
Huge lack of toilet paper in Europe makes this the next best thing.
The further Germany gets away from this silly notion that it will guarentee the periphery, the stronger the demand for thier paper. Who would have thunk? :)
Peter, correlation is not causation
the previous "failed" auction of Bunds was at a particular moment with a very, very low yield
one failed auction is really not that significant
Some pointed out to me, too, that the earlier failed auction was not as big an anomaly as I originally interpreted. History was there. Infrequent event, but there.
HOWEVER, as you say correlation is not causation.
Well I guess people recognize that Germany will not get trapped in bailout other countries by imposing hefty costs on its population through printing for its own banks mistake and other countries´banks mistake. So if Germany prints it will be just for to ease its own banking mistakes not everyone else´s. The other country are free to leave the euro and deal with their own banking losses through their own printing capabilities.
Debt=money. money=debt. more debt more interest more money etc. we are quite close to infinity.
Suckers
Yep- just further confirmation that Germany plans to leave the idiots in the EU to fend for themselves.......
However, will one be able to redeem the Bunds in DMs instead of crappy Euros?
Demand Soars for 5 Year at 1.5%...a deal only a Banker could love (print at 0% and earn 1.5%)...
What time is a statement from the European Summit expected on Friday?
Yes, maybe Friday...
we have a plan - planned for Friday
I heard they delayed release until the 6th Friday in December.
Expect Saturday to be the "new" Friday.
BTW - my first post so please don't maul me...... Oh, go on then.
Welcome Bagger. Best site on the web.
And since you asked for it... "Why don't you go back to your Occupy camp since the media claims how similar your two movements are!"
:)
Did you choose your name "Big Slick" because of the first letters? - BS!
I can now sit back and watch the plan unfolding..... or not. Just wish they would get all the pain over and done with - then we can start rebuilding.
Like the Germans like to say: http://www.bowness.demon.co.uk/buckle.jpg
I thought they like to say "touch my monkey."
(Now is the time on Shhprockets ven ve dance)
I thought it was "hande hoch".
Is it me, or does anyone else see an almighty run for physical gold coming soon!
I expect a down, first, before Christmas
good shopping time
SD - still the best avatar - period. :)
it's a Belgian comic figure - it's really good, isn't it? :-)
So let me guess...they will rally on Friday on a plan of a plan for a plan in 2012.
Isn't it head & shoulders that is just forming on XAG daily? The end is near bitches!
Fuck this shit. I wanna see some bankers hanging from trees and their wives getting fucked in the ass by hobos.
Foreplay should be over by now.
FUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUCKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKKK
Though I can't condone the verbiage, I hear you Golden Boy. It amazes me that no one seems to care.
Corzine will get a free limo ride to the Hill and then home.
My belief is that it will take a massive catastrophic event - none of this frog in boiling water stuff - but something where Joe Lunchbox's pension loses 30% in a day or his wife gets mugged and there aren't any cops left before he shuts off the damn TV and takes action.
Why did so many corporate stiffs go to jail 10 years ago following Enron, WorldCom, Global Crossing, Adelphia, etc, etc, etc and not one banker or politician has been convicted for the Trillions in lost purchasing power and bad assets I have been forced to eat as a taxpayer????
In my opinon this is contributing hugely to the confidence problem in the US. There was no need to Occupy Enron because everyone was in jail (or dead).
The politicians MUST understand this, and so the only explanantion I can think of for inaction is that THIS IS WHAT THEY WANT.
Where is that directing us?? (I genuinely don't know) What is our counterplay???
In 2005 the CEO of Refco was sent to jail for 16 years for stealing half as much as Corzine, but Corzine walks????? wtf
If the people aren't dusting off their pitchforks and ar-15s, they deserve what's coming to them.
Hell, everyone should just drink moonshine and stop giving tax money to the fucking state. Starve the Beaaaaaaaaaaaaaaasttttttt!!!!!!!!!!!!!
A tax boycott would be COOOOOL!!!!
http://www.marketwatch.com/story/euro-edges-lower-as-dollar-swap-demand-jumps-2011-12-07?link=MW_home_latest_news
Europe should come up with a PLAN BOND
Portugal sold some too..all good in the EU now...all is fixed...Greece even passed their laws to reduce their deficit to 5.8%.....it doesn´t matter that their GDP is negative..or that the EU is going into or is in a recession....or that Geitner had secret meetings with TPTB....no all is good...and gold is down.....WTF......I smell propaganda mucho....its way to quiet..
I'm anticipating a solid year for mushrooms. The weather is just right in the ME about now.
I'm not an expert on government paper, but this seems to suggest that investors think Germany will either (a) not allow heavy printing of euros or (b) will leave the eurozone and go back to DM. Given that, as anyone who has spent anytime living in Germany over the past 50 years knows, Germany will not abandon Europe and be seen to be going it alone, this seems to be yet more support for the thesis that the EZ will not inflate its way out of trouble.
pandit called MF - the primary dealer - a shadow bank "make no mistake"
And This
Clinton Collected $50K Per Month From MF GlobalFormer president’s new firm Teneo Strategy was hired to boost Corzine.by Neil W. McCabe12/05/2011269
A former MF Global employee accused former president William J. Clinton of collecting $50,000 per month through his Teneo advisory firm in the months before the brokerage careened towards its Halloween filing for Chapter 11 bankruptcy.
Teneo was hired by MF Global’s former CEO Jon S. Corzine to improve his image and to enhance his connections with Clinton’s political family, said the employee, who asked that his name be withheld because he feared retribution.
“They were supposed to be helping Corzine improve his image as a CEO—I guess you can tell how that went,” he said. Corzine resigned as CEO and chairman November 4.
Before Corzine joined MF Global in May 2010, the firm was a smart and well-run commodities broker, a culture that was turned upside-down by his leadership style, he said.
“The traders would be shaking their heads,” he said. “They would come back to their desk and say, ‘Well, I thought we were going to do this—but Corzine would come by and do something else all by himself,’” he said.
The Teneo contract with MF Global lasted at least five months, he said. “The board cancelled it after Corzine resigned.”
The source, who is no longer associated with MF Global, said Teneo is a dual-track company with one side devoted to merchant and investment banking and the other side set up to provide image and strategy consulting services.
Clinton is the chairman of the company’s advisory board. His duties and compensation have not been released. The other member of the board is former British prime minister Tony Blair?.
Two of the three founding partners are very close to the former president and his wife, Secretary of State Hillary R. Clinton. They are Douglas J. Band, who is the former president’s counselor and has served on his personal staff since 1995 and Declan Kelly, who earned the “Hillraiser” status in the secretary’s 2008 run for president for bundling more than $100,000 for the campaign.
Another prominent member of the Clinton political family is Tom Shea?. Shea is a senior vice president for Teneo Strategy and served as Corzine’s chief of staff, when Corzine was the governor of New Jersey.
Kelly sold his public relations firm Financial Dynamics in 2006 to FTI for $340 million, and stayed with that company until July 2009, when he joined the State Department as the Economic Envoy to Northern Ireland.
The source said, “Kelly was given a job they created out our whole cloth.” The job did not exist previously.
“He basically got to ride around developing a book of business, while he waited for his non-compete clause to run out,” he said.
Kelley and the former president traveled together networking and making introductions at international conferences and events, he said.
The Secretary of State also traveled with Kelly, including the October 2010 U.S. – Northern Ireland Economics Conference, which Kelly organized and at which the secretary was the featured speaker.
The secretary announced that she accepted Kelly’s resignation May 11.
Teneo landed its first major client June 1, when the Rockefeller Foundation gave Teneo a $3,447,150, six-month contract to help plan the foundation’s 2013 centennial.
The foundation is another member of the Clinton’s extended family. It gave Clinton its Lifetime Innovation Achievement Award July 27 and the foundation is listed as a between $1 to $5 million contributor to the William J. Clinton Foundation, along with several members of the Rockefeller family who are listed as individual contributors.
[In the preparation of this story, several emails and phone calls were placed to Teneo, MF Global and the State Department for comment. In each case, there was no response.]
http://maxkeiser.com/2011/12/07/jp-morgan-prevent-a-comex-default-by-stealing-peoples-money-from-mf-global-just-before-they-are-due-to-take-physical-delivery-of-gold-and-silver/
for the last time, it's deus ex FT, not deux ex FT