Record Low 30 Year Auction Yield Is Snoozefest Compared To Yesterday's 10 Year Reopening

Tyler Durden's picture

Anyone expecting fireworks in today's 30 Year bond auction, and hoping a repeat of yesterday's WTF 10 Year bond auction which saw the High Yield 6 bps inside the When Issued, will be disappointed. Yes, the auction priced at a record low yield of 2.58% (that said, only 40.64% was allotted at the high with a 2.436% low yield), and yes, this was again well through the When Issued 2.594%, but that's about as far as it goes: the Bid to Cover was 2.70, in line with the TTM average 2.64, Primary Dealers were stuck with 43.1% of the auction, below the average take down of just over half, while the key Directs took down 20.1% of the issue, which again was high, but nowhere near yesterday's soaring Direct activity, which led many to speculate that there could either be a collateral squeeze, or a rapid reallocation from the ECB's ZIRP cash into US paper (coupled with even more EURUSD repatriation as BAC has also figured out now, only one year after ZH). Bottom line a snooze, and next we look forward to two weeks from today, when the next trio of 2, 5, 7 year auctions is on deck, which just may send total US debt to $16 trillion.

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MillionDollarBogus_'s picture

yield heading to zero....

it has to, really, to keep the ponzi going.....

slaughterer's picture

Negative yield forever--the new patriotic spirit. 

BalanceOrBust's picture

Strawberry fields and negative yields forever....

Mr Lennon Hendrix's picture

The real yield is already negative.  CDs and many bonds are yielding negative.  Factor in the opportunity cost that they are dollar denominated, and that their principle is also losing to inflation, and these are the worst investments out there, other than holding cash.

Stocks?  Who cares when the counter party risk is so high.  Who knows what each corporation is up to.

The best investment is precious metal.  Take $30 out of your pocket and buy an ounce of silver, and go from there.

veyron's picture

Stock counterparty risk is fairly muted.  It's the futures and other contracts that should concern you ...

DaveyJones's picture

...and as money becomes more fiction than fiat and more and more come to realize, they will avoid the long term promise and crowd further and further on the shorter end further driving inflation on short immediate items.

BalanceOrBust's picture

OK.  Now this is really getting ridiculous.  If the Fed isn't buying these bonds, who is?  I can see locking your money up for a couple of years, but 10 and 30.  The money in these bonds will be yielding negative returns for a generation!

If that is not a pessimistic assessment of the future of the global economy, I don't know what is!

Al Huxley's picture

Buyers not planning to hold, just sell to the next greater fool.

DeadFred's picture

30 years only last a short time before the Fed swallows them. 10 years are for repos. Not too surprising there wasn't a WTF factor today

TheCanadianAustrian's picture

No reason why governments and corporations in Europe and pension funds around the world wouldn't be dumb enough to buy them. They assume that after the dust settles in Europe and a bottom is formed, and the US is well into recovery with 10Y interest rates back up to a healthy 3-4 percent, they'll sell their bonds and only lose a bit of skin. They think this modest loss will put them in much better shape than people who stayed invested in bonds equities and faced defaults, haircuts, and bankruptcies.

That's why this thing is so damned springloaded. That's why the Fed isn't doing anything. They don't need to right now.

In Greece, 1-year yields went from sub 1-percent to the high single digits in a matter of weeks. People have no idea how fast this thing can go up in flames. Of course, unlike in Greece, it won't be the short-term bonds spiking to the stratosphere in the US, it will be the long ones. Fear of inflation is the death knell to long bonds as opposed to default which hurts short bonds.

Just imagine the US 10 year going from 0.3 percent to 8 percent in a matter of 30 days, WITHOUT a recovery and WITHOUT a collapse in the stock market. My inner redneck gets the giggles just thinking about it.

DaveyJones's picture

our government has lost it regular suckers and is out trying to woo (con) new players (countries)

PulpCutter's picture

Love how the Austrians immediately jump to "it's just the Fed buying them".  Folks, IBM sold corp 3yrs for a record low, and 3yrs for 0.75%.

Choose your theory to fit the facts; don't choose your facts to fit your theory.

sickofthepunx's picture

with no velocity of money in the system, hyperinflation cannot happen.



LawsofPhysics's picture

Bullshit.  A funny thing happens when certain necessities become scarce.  FAIL.

DaveyJones's picture

second his vote.

hyperinflation is more atrocity than velocity.

it's a psychological moment and phenomenon.  

PulpCutter's picture

Indeed - one suspects that the only place hyperinflation 'exists' is in the heads of Austrians.

LawsofPhysics's picture

Try to actually address the issue of scarcity next time troll.

DaveyJones's picture

yes, events in history (or at least those denying it) are often equated to human imagination. 

PulpCutter's picture

Exactly.  For some reason, Austrians are unable to see that additional dimension. 

BalanceOrBust's picture

I think the hyperinflation only sets in when the bond yields start rising and money that had been locked up in a useless experiment suddenly starts running wild.

The Fed is betting this won't happen.  The Austrians know it will happen.

PulpCutter's picture

You mean, the inflation kicks in when the inflation kicks in??  Wow, how'd you figure that out?

BTW, America is paying private debt down at the fastest level since the 1950s.  Sorry - Apocalypse not Now.  Keynes works.  Yawn - what's for lunch?

LawsofPhysics's picture

So you are saying that there is no inflation in the real economy now?  Thanks for the laugh.

Pretty weak trolling, prosecute the fucking fraud already, restore the rule of laws and contracts and real consequences for bad behvaior.  NO monetary system works without the latter.

PulpCutter's picture

There are two big reasons today's right loves the Austrians. One is that Austrian economists reject empirical analysis, and instead believe that you can reach conclusions about correct economic policies from a priori principles. It's philosophy dressed up as economics; with the Austrians, there is never any risk that real-world events will interfere with your ideology.

The other big advantage is that the main Austrian thinkers, Friedrich Hayek and Ludwig von Mises, are dead, so they can't argue with your interpretation of their work. This is especially important with Hayek, who got sort of squishy later in life.

And that is how so many on the right have pulled off the remarkable feat of going through the 2008 crisis and its aftermath without revisiting any of their policy views. Mine have certainly changed a lot -- I have a much different outlook on monetary policy and bank regulation than I did four years ago. Posner had a big shift on fiscal policy.

But if you have Mises at your side, you "know" that empirical findings have no bearing on what policy should be. Leaning on Austrian thinkers is a great way to avoid further thinking. If Posner feels like he's no longer welcome on the right, it's probably because the right has decided it no longer needs people like Posner.

LawsofPhysics's picture

Just like any other paper-pushing idiot - you completely ignore the question of inflation in the real economy -  FAIL.

The laws of Nature and physics really don't give a shit about make-belive eCONomic "theories".  Seems humanity has to keep re-learning this lesson.

PulpCutter's picture

IBM able to sell 3yrs at 0.75% isn't part of the real economy?  Nonsense: you're just picking parts of the economy that support your theory.  Choose your theory based on the facts; don't choose your facts based on your theory.

BTW, I'm saying that the facts say Keynes works.  I did not say or imply that we shouldn't persecute the WallSt banksters - you're putting words in my mouth, there.  I completely agree that we should string them up (not kidding, actually), will provide the rope and tree.  Further, I'll add that it's the right that's fighting against regulation of the banks, and is de-funding the WallSt regulators and prosecutors.

LawsofPhysics's picture

"IBM able to sell 3yrs at 0.75% isn't part of the real economy?" - maybe to bond traders, I have always remained focused on retirees who need to deal with real inflation, are you saying real inflation is less than 0.75%  LMFAO!

PulpCutter's picture

Nonsense.  What you're focused on is those facts that fit your theory.  Any other facts must not be real, right?

Your theory isn't falsifiable, yet that doesn't trouble you.  May we conclude FAIL was what something you heard often, when you tried to learn the laws of physics?

LawsofPhysics's picture

Stop avoiding the question already.  You really belive that retirees will live just fine with little to no return?  FAIL!


LoneCapitalist's picture

I think eventually the fed will lower interest paid on excess reserves. Then the hyperinflationary fun starts.

LawsofPhysics's picture

Hanging out with the growth.  Anyone who thinks that forcing retirees to become bond traders in order to survive is a good idea should be shot.  There is a very real cost for capital creation (especially when no real value is created) that always comes roaring back, usually when all paper goes bidless.   Let me guess, you also think the guberment CPI reflect the "real" inflation rate.  FAIL.

BalanceOrBust's picture

Only the Fed can buy the treasuries with impunity.  Everybody else who buys them has to suffer through negative yields and a falling dollar.  They will be lucky to get 30 cents back on the dollar if they hold to maturity (and yes, somebody will be holding them at maturity).

slaughterer's picture

3,2,1 cue Robo intoning the 20 year bull market in Treasuries...

dereksatkinson's picture

If we have a 20 year bull market from these levels, we are all fucked.

JustObserving's picture

It is like burning your money buying treasuries for 30 years at 2.58%.  US debt is $15.9 trillion and increasing at $1.5 trillion a year.  Unfunded laibilities are $119.7 trillion and increasing at $6.7 trillion a year.  There is litte chance that the dollar does not lose more than 90% of its value in 30 years.

Buying agricultural land, precious metals is so much safer but the sheeple have been scared by the constant attacks on precious metals.  

slaughterer's picture


Bunga Bunga's picture

2 Y German bunds negative


slackrabbit's picture

...we must be near  the event horizon, we've been here for four years

PulpCutter's picture

While you're waiting for the Apocalypse, America is paying down private debt at the fastest rate since the 1950s.

So much for the continual "ya can't fix debt with more debt" chanting.

Yes. Virginia, Keynes and Minsky were right.  Yawn.  So, if Youk manages to foul off more than one into John Henry's box, figure Henry will realize it's deliberate?


TheCanadianAustrian's picture

Public debt is much, MUCH worse than private debt.

The article mentioned that the ratio of total debt (private + public) to GDP fell from 3.73 to 3.36. Assuming that's true, it's because converting private debt to public debt (through programs such as TARP and QE) counts as government spending without affecting the total amount of debt. And government spending counts toward GDP. That means that GDP goes up, debt stays the same, and the ratio falls.

So the fact that ratio is falling is actually a BAD thing. It means the government is printing money to give to institutions that don't know how to invest it properly.

LawsofPhysics's picture

What else would you expect after the socialization of private losses?