Primary Dealer Treasury Holdings Soar To Record

Tyler Durden's picture

Whether it is the need to soak up all of the Fed's sub 3-year paper sold on an almost daily basis by the Fed courtesy of Operation Twist (which despite ending in 2 weeks, has already brough the average SOMA holding maturity to a record 105.5 months despite the Fed's implicit target of 100 months, meaning the Fed has overshot its duration ramping target by a lot), or because dealers are suddenly very concerned with having equity exposure, in its last update, the NY Fed has disclosed that as of June 6 Primary Dealers held a record $128 billion in Treasury holdings, a massive 41% increase over the prior week's $91 billion. Whatever the reason, Dealers are now firmly into Trasurys, having increased their net holdings across the curve by $170 billion from -$48 billion last April. And just as notably, for the first time since May 2010 Dealers held no offsetting short positions anywhere on the curve.

In conclusion: absolutely everyone is now on the same side of the UST trade.

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They can have it....I don't want any of that crap. 

malikai's picture

Sounds like Benocide will be buying Treasury dogshit.

Bastiat's picture

They learned something from taking over GM:  channel stuffing!

Thomas's picture

Treasuries are the bubbles to end all bubbles. When the secular bear begins in earnest, the carnage will be deep and protracted.

Silver Bully's picture

'Sounds like Benocide will be buying Treasury dogshit.'

Paging Mr Gross, your treasury shorts are on line 1...

battle axe's picture

The Bunker Trade, Risk off.....

veyron's picture

"In conclusion: absolutely everyone is now on the same side of the UST trade."


Soon we will see an interest rate hike, then EVERYONE will be mandingo'd

fonzannoon's picture

Interest rates may rise, but not because of a hike.

Stuck on Zero's picture

If the primary dealers are stocking up then they anticipate a rush to Treasuries very soon.  What are they anticipating? 

mayhem_korner's picture



Legions of bankrunner-filled lifeboats coming from Espania and Italia (oh...and Cyprus, too).  Once the Euro Cup is done, there won't be anything holding back the hordes...

ATM's picture

I think the are front running Bernenke who will anounce another round of twist/QE whatever he wants to call it where he will buy all thise debt at a nice mark up from his friends. Free money for them. Isn't that special.

Panafrican Funktron Robot's picture

"Free money for them."

And anyone else piggybacking the trade.  I'll preface this by stating that the vast majority of my wealth is in gold and physical property, but long treasuries started becoming pretty obvious back in early April when the /ZB crossed back over the 140 mark (though I wasn't expecting it to run this hard).  

SeverinSlade's picture

PDs can have their US Trasheries.  I'll hold onto my physical AU and AG thank you very much.

BTW, thank you Blythe and BIS for keeping the blue light special on PMs going for so long.

Rainman's picture

Why not ? Japanese bond bubble is going into its 3rd decade.

Panafrican Funktron Robot's picture

Exactly.  The funny part is everyone is all like "but the US isn't like Japan, Japan has demand for their treasuries from the Japanese housewives!"  Bernank = Japanese housewife

sudzee's picture

Clearly just a little channel stuffing.

AssFire's picture

Funny how the worldwide risk ramps up just in time for the (temporary) end of our QE.

It is said nothing in politics happens by chance.

I think the same holds true for the arrival of QE or the bailout tit- expect it as soon as the flight to "safety" is over.

Chaffinch's picture

Is 'trasurys' a typo - or are we heading towards Trashuries?

Damn - Severin got there first!

SeverinSlade's picture

Don't you hate it when you have the perfect line, only to watch someone else say it first?

NotApplicable's picture

Or worse, you don't see it, and end up looking foolish without even knowing it.

Lionhead's picture

This is excellent news. Remember the bonds are but a derivative of the currency. Everyone that has gone on the 'lifeboat' will face the sucking sound soon.

SeverinSlade's picture

Um, if global QE is imminent then why are PDs heavily in USTs?

I'm going to laugh if the CBs solution to support the markets is to extend Operation Twist by a few months and just keep those FX swap lines open.  Markets will plunge and then we will get the new QE just in time to allow the PDs to unload their USTs to Goldman's clients.

mind_imminst's picture

I am glad many people have not forgotten that this is a rigged market. The PDs know in advance what the FED is going to do, which is overall to screw the common investor, but more specifically keep the big banks afloat in a fiat ponzi scheme. So when I see everyone on the same side of this trade, I am not going the opposite (which is a good strategy in many markets). No. I am going to short the S&P right now because the PDs are probably expecting a drop in the market and another pavlovian rush to USTs. They most likely already know when the FED is going to announce the new QE. I am going to make money on the way down in stocks, then turn around and short UST, before a major announcement from the FED. I figure an S&P decline of 10 to 20% should do the trick before the FED announces the latest greatest and biggest QE. I would also watch the PDs for when they just begin to unload their UST...that is when it is getting close to FED action to prop up the market. The PDs know what is coming in advance, down to every last detail. They are positioning themselves for profit in a manipulated ponzi market.

Bringin It's picture

Nice post.  I agree with your post.  How does one see this?

... watch the PDs for when they just begin to unload their UST

August is a good time to kill the dollar because the resulting inflation won't really materialize for a month or two and then it will take everyone another month or two to see what's going on and by that time the elections will be over.

Jim in MN's picture



What comes after the wind-up?   And boy, does this look like the mother of all wind-ups....




Setting up for a real crisis/control opportunity: a snapback in US interest rates.  Then everyone will be on their knees begging Bennie for a fix and it would have to be an unconventional fix, what with the target rate already so low.....



NotApplicable's picture

Nearly ALL credit cards now have variable interest rates, which so far have not moved (in my case) since they first rose on the switch from fixed.

sudzee's picture

I'm thinking the primary dealers are feeling a little like this duck:

world_debt_slave's picture

coming soon to your IRA,401k

Stoploss's picture

Im thinking the S&P should be at 400 based on that.

junkyardjack's picture

It seems like with all the shadow programs the Fed has with Europe the treasury market is a completely different beast than it was in 2008, I don't know much of anything about how they work but last time TLT for instance was at this level it was the peak of the crisis and came down almost immediately.  Now this is just the regular trading range.

LULZBank's picture

"Come play with us!! Look its so much fun!!! We know you want to have some bonds!!"

Aunty Christ's picture

what the hell else are they gonna buy with the $2T the Fed has given them over the last couple of years??

katchum's picture

Who will be the genius going to the other side of the boat.

Rastamon's picture




now that the FED has successfully corralled all the sheep into the pen ... let the slaughter begin.

DavosSherman's picture

This shit's totally fucked

Bastiat's picture

Thinly veiled monetization: free money to primary dealer to buy UST paper which they then use as collateral for the free money.  UST channel stuffing.

slewie the pi-rat's picture

this is xlnt bankstering, imo

since slewienomics does indicate that: systemic stability + finacing the goobermint = the FED's job under dodd/frank (2300+ -page 2010 law)

since Ts = hi liquidityReserves, we see the US system ready for anything from the clown cars

which doesn't bother slewie in the least, BiCheZ!

besides, we may be repatriating debt for a nobler,  NW0-type (t)reason...  L0L!!!

when all the king's horses and all the king's men can barely keep the checks in the mail, this is what is s'posed to happen

this is how the FED system is s'posed to work

the "whatever" reason = stabiliteee and in case people haven't noticed:

  1. it is working (I think)*
  2. it is kinda bullish; at least in contrast to instability + chaos which didn't seem to tyers trooly to be much good for anything except PM and cash...

*:  as  frequently discussed in slewinomics: the "screwed down tightness" of the markets is IN ITSELF a sign of the new FED job description and overarching systemic man-date;  when prez0 reveals what he has actually accomplished, mittens will be crushed like a bloody glove...  L0L!!!

Lucius Cornelius Sulla's picture

The more people talk of a bond bubble the less I believe it.  The FED is using the BOJ's playbook.  The 10yr is going to .5%,  with deflation for 20 years.  Wake me up in 2027.

youngman's picture


riley martini's picture

 The PD's have board seats on the Federal reserve banks so what ever they do they do with inside information. Jamie Dimond board member Bank of NY perfect trading (wealth transfer) in UST. We need to change the ownership of the Fed. Res. Bank.

earleflorida's picture

Ref:       'The McFadden (- Pepper) Act'  enacted *1927  [brief history of banking laws]























Grand Supercycle's picture

Rally warning continues...

SPX / EURUSD / GBPUSD / AUDUSD / GOLD / SILVER bullish warning on daily charts has strengthened.

As mentioned, shorts will be squeezed next week onwards.