Record Low Yield At 7 Year Auction, Second Highest Bid To Cover Ever Sends Total US Debt Over $15.1 Trillion

Tyler Durden's picture

As the panic from the busted German 10 Year auction earlier has settled, the money has gone to the last "safe" place for fiat (until the world wakes up to the fact that the "US is not Germany" and comprehends that it actually is) and flooded today's final of the week $29 billion 7 Year auction. The auction was a massive success: it priced at 1.415%, the lowest yield ever, and well inside of the WI which was trading at 1.44%. Not only that but the Bid To Cover soared from 2.59 to 3.20, the second highest ever except for May's 3.24. The internals were a little shaky, with Directs taking down a record 18.85%, and Indirects responsible for 39.88% (the balance going immediately to repoing Dealers). Still there is no denying it: when the panic is palpable, the last safe place for the time being are US bonds. And with that auction, total US debt, which was at $15.042 trillion, has now been pushed above $15.1 trillion a few days after we passed $15 trillion for the first time ever, once the $60 billion in new debt issued this week settles. As a reminder, the debt ceiling currently is at $15.194 trillion, which means there is about two auctions worth of issuance left before the US has to deal with the whole temporary debt ceiling hike all over again - luckily it will be merely a Senate vote (democrat controlled), so there will be no full blown scandal. The scandal will come soon enough.

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He_Who Carried The Sun's picture

Sadly the US situation is worse than Germany's since the Germans won't have to translate their tax forms to Mandarin...

Long-John-Silver's picture

It's going to Suck and Blow at the same time.

CORNGUY's picture


Mr Lennon Hendrix's picture

No need.  Everyone already speaks english.

Tramp Stamper's picture

There are more people in China that speak english, than there are people in the US.

Mr Lennon Hendrix's picture

Everyone speaks english, even the French, though they won't admit it.

chubbar's picture

And several million in the US don't speak english either. Keep the southern border wide open a few more years and english will be a second language for most people born in the U.S. Press 2 if you want to hear this in Spanish.

Big Slick's picture

"Living in a van down by the river!"

Buck Johnson's picture

This is becoming a black comedy, it truly is.  Everyone is insolvent, but which one won't bust in a few weeks that is the question.

transaccountin's picture

why only a senate vote? whens the next one where the bs happens

any1 putting fiat into treasuries is whatever cant wait for bubble to pop

kengland's picture

And they have no problem whatsoever. When the world uses your paper, you have the world by the balls

Greater Fool's picture

And if they stop using your paper and that seems like it's important, you bomb the crap out of them. So you pretty much have 'em by the balls either way!

And some people are mystified that Presidents of both parties refuse to cut military spending.

trav7777's picture

oil trumps paper and bombing.

the collapse of the reserve currency leads to the hyperinflationary scenario

Mr Lennon Hendrix's picture

Stop being so simple.  To get credit just say things like, "Times ten" and "Math".

kengland's picture

That's right. Just not yet. Trav, I need a list of books from you please. Books that you would recommend. I really apprecaite your point of view. Keep up the good work.

Mr Lennon Hendrix's picture

Yup, because paper trumps all.  Go ask Robo.

Mr Lennon Hendrix's picture

Debt debacle 2.0, bitchez.


U.S. paper good as tungsten gold, or maybe just a bit less. 

Mr Lennon Hendrix's picture

Tungsten is good until we audit the forts.  Paper is good until we audit the Fed.  I wonder which happens first.

spanky bernanke's picture

No real need for a budget. Nothing to see here, move along.

TeamDepends's picture

Hope and budget don't get along too well.

Mr Lennon Hendrix's picture

Obama has never used a budget, why would he now.

Ned Zeppelin's picture

Santa will be dropping an Xmas eve vote to increase the debt ceiling down the chimney with care! 

dereksatkinson's picture

When we have record directs, isn't that a contrarian indicator?  The public is buying?

sitenine's picture

Not a contrarian indicator; but an indicator of fear.

Where the hell else are soon to be retiring (good luck with that) folks going to put their life savings now that every other asset class has turned to shit?

dereksatkinson's picture

If the public is buying record amounts of treasuries out of "fear" without any regard to the value of the asset they are buying, that is not a bullish thing for treasuries.  At least not beyond today.



Even a broken debt clock is right twice a day. 

Cognitive Dissonance's picture

Hell, what's the difference between $15.1 Trillion and $30 Trillion when all you need do is print all your problems away?

Mr Lennon Hendrix's picture

Oliver Sarkozy couldn't have put it better.

hedgeless_horseman's picture



"Excellent. Everything is going as planned."

-Darth Timious

LawsofPhysics's picture

With no where left to run, the masses clamor into the last "safe haven" to be slaughtered.  Is everybody in?  The ceremony is about to begin...

wish I knew some links to Wile E. Coyote clips wearing a sheep costume.

rambler6421's picture

Just wait when our treasury market becomes like Italy.

Deadpool's picture

whom - without penalty of death by bunga bunga - would lend at 1.415% for 7? oh that's right, we "owe it to ourselves". God help the working man, in 2018 when that shit has to roll.

object_orient's picture

Where's the problem? Soon yields will be negative so .gov makes a tidy income by issuing more debt, More .gov income means less need for taxation, freeing up money for consumer spending and boosting the economy. Formerly burdensome credit card debt will become like a money market account. The perpetual motion machine has been invented.

FlimFlam's picture

Safe for now.  Next month, perhaps very different.

FlimFlam's picture

Safe for now.  Next month, perhaps very different.

Eally Ucked's picture

And who's bidding? Do we have any info about it? 

Hmm...'s picture

Interesting that USD is still used as safe haven over PMs. Seems counter intuitive to me... Unless investors and speculators don't think the PM market is big enough to handle the excess liquidity? Or just manipulation?

I continue to be a little nervous that PMs are correlating so much with equities lately.

Junk as you wish, but I have a lot of skin in the game and my assets are somewhat PM heavy, at least for me.

Deadpool's picture

don't give up faith. options expiry was this week...MF Global messed that up. Dec is big delivery month (stand and deliver or fail). China, Russia and India are buying. 11th year in a row of positive gains for gold. debt and dollars are toast. gold is eternal.

Hmm...'s picture

Oh I agree that PMs are likely great in longer term horizon,(next few years) I'm just a little wary of short term. Unfortunately in this game the winner is the person who loses least...

Deadpool's picture

well God help you if you just joined the PM party this year. 11th year is a charm? take heart that in those 11 years gold has had ZERO with a 8% correction and only 5 8% quarterly corrections. buy the dips!

Hmm...'s picture

I've said this before, but I have PM exposure from a few years ago, and then I increased it this year.

Most recently I bought around Labor Day, so I'm pretty upside down on that position.

the last few years I focused my energies elsewhere, by paying off ALL debt. 

My assets: home (paid), whatever is in my home, 2 cars (paid), 7 bicycles (paid), small plot of arable land with a water source (paid), More USD than I care to admit (spread around 3 credit unions earning 0.5 to 0.85%).  some physical PM.  A fair amount of CEF (my entire IRA is in CEF) and Treasuries in my 401k. and a little physical.  (less than most here would recommend, enough for me so I can still sleep at night).

I don't own guns personally, because I don't want them in my house.  But my family has many many guns, and I help my brothers buy guns.  (if the STHF they will be my muscle).

I am not a "true believer" in the precious metals.  I think they have a strong  story and good rationale for owning them.  However, I believe there are pitfalls. 

My dilemna: I have too many USDs.  I cannot decide if I should buy more PMs or if I should buy more arable land with water source.  There are pros/cons to both.  Everybody here knows the pros to PMs.  Cons include: Govt can take my PMs.  PMs are manipulated now, they may be manipulated going forward, PM's have made a startling run the last 10 years after falling for 20 years.  There are many pros to owning arable land with water.  However, Land can be taken through taxation (my local property tax bill on primary home went up 17% last year and 5% this year), and Land values are dependent on commodity prices, and prices for good pieces of land are high, thus could fall significantly.  also: I"m not a farmer!  (although I might be forced to be one depending on outcome).

anyway, I'm nervous with Gold's action the last 3 months.  I'm always a nervous nellie.  and I'm ok with that, it's kept me out of harms way thus far.  But I wish Gold weren't so correlated with equities lately.  and I it definitely is interesting (in a bad way) that "safe haven" still means "USD" to the masses.

Big Slick's picture

What CEFs are you in??

smiler03's picture

I admire your honesty and your position. If I were you I'd think about buying a farm instead of having a house and plots of land.

Best Wishes :O)

FlyPaper's picture

TO Hmm...   I think the answre to your question is Liquidity.   You can go out and buy bonds and dollars with no problem. If you buy gold you have to store it.  Besides this, the next piece of news is how the US is saving Europe, overtly or clandestinely via the FED and IMF.