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Safe Haven? Record Dump Of US Treasurys By Non-Central Bank Foreigners In June

Tyler Durden's picture





 

There was little to smile about in today's Treasury International Capital data for June (as always 2 months delayed). As usual the press release was chock full of irrelevant gross level data, so here is the bottom line. The good news: despite all the posturing China, continued to buy Treasurys, with its total increaseing from $1160 billion to $1165.5 billion. The bad news: China was more or less the only one buying, as total LT Treasury activity saw a net sale of $4.5 billion in June: the first net sale of US paper since May 2009, and only the third time we have seen a net sale of US paper since the start of the Second Great Depression (the third time being, paradoxically, just after the bankruptcy of Lehman, see chart below). The bad news gets downright ugly when digging into the foreign transactions. As is well known, total foreign purchases (or sales as the case may be) consist of central bank transactions, as well as those by non-monetary authorities, i.e., retail and institutionals. And here is where we get today's record: at $18.3 billion in total non-central bank sales, this was the biggest one month sale of US Treasurys in history! Luckily, in keeping with the maintenance of the optics of the global ponzi, this was buffered by central bank purchases of $13.8 billion. With everyone needing someone else to buy their debt we wonder just how much longer, everyone will be able to buy everyone else's debt, even as sales are bound to increase month after month. And the last really ugly news (for ponzi'ists): while China may be posturing, Russia is doing anything but: its holdings have plunged to a fresh multi-year low after Putin gave the green light to dump another $5 billion in US paper, bringing Russia's total to just $110 billion, a 38% drop from the $176 billion in October.  A little birdie tells us gold is the primary beneficiary of this asset roll over.

Total foreign monthly transactions across all asset classes:

Recent changes in top holders of US debt:

A focus only on Treasurys:

A split of UST transactions between official institutions and "everyone else" - take our word for it: the red on the bottom right is a record.

And lastly: the "evil empire" which continues to sell the "crumbling empire" and buy gold:

 


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Mon, 08/15/2011 - 10:30 | Link to Comment No Bid
No Bid's picture

Please forward to Joe  W @ Business Insider [a business humor website].

Mon, 08/15/2011 - 10:31 | Link to Comment Biggvs
Biggvs's picture

Yet treasury prices spike up in August after the ratings downgrade. Go figure.

Mon, 08/15/2011 - 10:34 | Link to Comment EscapeKey
EscapeKey's picture

Santa Claus is still buying. And I hear the tooth fairy need yield to make payments to children.

Mon, 08/15/2011 - 12:54 | Link to Comment Sudden Debt
Sudden Debt's picture

That's because they are old school. To bad a lot of children will be dissapointed when they find bonds in the socks this year....

 

Mon, 08/15/2011 - 10:35 | Link to Comment Dr. Engali
Dr. Engali's picture

Retail made a quick jump out of the market and into money market funds. That is why you had a big move in treasuries.

Mon, 08/15/2011 - 10:53 | Link to Comment Biggvs
Biggvs's picture

The 10yr and 30yrs spiked as well, not just short term paper. But agreed - the dump in equities certainly helped.

Mon, 08/15/2011 - 11:32 | Link to Comment SheepDog-One
SheepDog-One's picture

Wow if all we've got left is dump stocks to give a momentary boost to treasuries and vice versa, we're in some deep kimchee.

Mon, 08/15/2011 - 10:37 | Link to Comment IQ 145
IQ 145's picture

The ratings downgrade appeared to have no effect on the treasuries markets. There's no measurable meaningful l statistical correlation. This is the pronouncement of Mr. Market; Whether is it's right wrong or indifferent I don't know. Tyler is very bearish, of course; and that's his right. I'm pretty darn bearish too. I think you could sell the Long Bond Today as a short, but you better look at the chart yourself; it's a "weak" I think, from me.

Mon, 08/15/2011 - 10:50 | Link to Comment SheepDog-One
SheepDog-One's picture

Im not trading anything that pays off in off-the-cliff dollars.

Forget dorky Treasuries anyway, lets get to the sexy stuff like QE3 that has been priced into these stupid markets about 40 times over now. Wheres the QE need?

Wheres the fear and panic? Everywhere I look all I see is big smiles on calm Hindu cow faces. All is well, bitchez.

Mon, 08/15/2011 - 12:49 | Link to Comment Ricky Bobby
Ricky Bobby's picture

Mr. Market? You mean institutions following price the control settings from the Politburo.

Mon, 08/15/2011 - 14:35 | Link to Comment gofigure
gofigure's picture

Yes?

Mon, 08/15/2011 - 10:32 | Link to Comment jimijon
jimijon's picture

Help me nominate Charles Ponzi for the Nobel in Economics post humously.

 

https://mundogold.wufoo.com/forms/z7x4z5/

cheers

Mon, 08/15/2011 - 10:32 | Link to Comment IQ 145
IQ 145's picture

Treasury prices spike up because of the "flight to quality" which is related to the downwash in equities; eg. the money has to go somewhere. This is an extremely old and well understood thing.

Mon, 08/15/2011 - 10:34 | Link to Comment SheepDog-One
SheepDog-One's picture

Downwash in equities? What, 3% or so? Big deal.

Mon, 08/15/2011 - 11:07 | Link to Comment scatterbrains
scatterbrains's picture

well yea that 3% reflects on those humans that were still in the market at that point.  Now it's off to the races whether the humans participate or not.. or so says the dollar anyway.

Mon, 08/15/2011 - 23:50 | Link to Comment boiltherich
boiltherich's picture

3% of a 24 trillion market cap is a big deal.  It is almost as large as the first big bank bailout. 

Mon, 08/15/2011 - 10:36 | Link to Comment EscapeKey
EscapeKey's picture

Right, and today where equities go up and bond yields stay static? Or does this rule only work one way?

Mon, 08/15/2011 - 10:41 | Link to Comment SheepDog-One
SheepDog-One's picture

Sure, apparently the trick is people have only 2 places to 'invest', stocks or bonds, and BOTH can be raised by alternately chasing people from 1 into the other, and vice versa....kind of like spinning cotton fibers into gold I guess.

Mon, 08/15/2011 - 10:33 | Link to Comment SheepDog-One
SheepDog-One's picture

So POMO really was just payoff bankers while they sell their UST's. So now what?

Mon, 08/15/2011 - 10:34 | Link to Comment LongBallsShortBrains
LongBallsShortBrains's picture

Selling more 30yr at these levels. ...... Ballsy or brainy?

Mon, 08/15/2011 - 10:57 | Link to Comment Biggvs
Biggvs's picture

Ballsy since the yield went all the way down to 3.5% when the market swooned. I'll bet it swoons again soon. Dead cat bounce in the S&P 500 of 9% and counting.

Mon, 08/15/2011 - 11:04 | Link to Comment Boston
Boston's picture

Ballsy.

What triggered your trade?

Btw, I'm looking for shorting (10 year) opportunities (after being long for 6 months, and now flat).  While tempting, my analysis says it's still to early to short.

Mon, 08/15/2011 - 12:35 | Link to Comment LongBallsShortBrains
LongBallsShortBrains's picture

I flipped a silver eagle and a platinum eagle. Both came up tails. Time to sell. Kept the gold eagles hidden in case they become "illegal" to hold.

Joking aside. The runup in the 30 triggered it. Decided to short a while ago if they hit 137.75. Only sold a few Will load the boat short at 142.75. And the truck at 147.75. Don't know where to puke them if wrong. But I am learning and watching close. It's money I can lose. Hope the deflation shit is temporary Long silver gold and platinum. All physical. Long 30.06. Long land, chickens, turkeys, ganja Short brains and trust in the .gov. ( and brains too)

Mon, 08/15/2011 - 23:54 | Link to Comment boiltherich
boiltherich's picture

Bout time we had equality in the anatomical avatars.  I would have posted mine long ago but they won't both fit on a 40X40 pixel photo.  Now if you could just get them to jiggle up and down, or better yet helicopter them. 

Tue, 08/16/2011 - 10:00 | Link to Comment LongBallsShortBrains
LongBallsShortBrains's picture

Mine wouldn't fit either. Admit I lifted them from google images. I thought about making an animated gif to helicopter them, but since they are not mine, I figured I would leave them alone...... Wouldn't like to find out I was playing with somebody else's sack.... I might like it. Then I wouldn't know what to do.

Mon, 08/15/2011 - 10:36 | Link to Comment Robslob
Robslob's picture

Another downgrade will come from some rating agency per instruction of the U.S. Government when more foreigners again sell treasuries and the U.S. needs locals to buy more crap therefore containing all the crap in one country.

When each country then gets all their own to bring their money home the final chapter can begin...a new one will begin with gold.

Mon, 08/15/2011 - 15:21 | Link to Comment DosZap
DosZap's picture

Robslob @ 10:36,

Well 12 Trillion in actual PRINTED USD's would be a hell of a long time coming home.

Only approx a third of all currency is in the USA, or in Americans hands.

Mon, 08/15/2011 - 10:38 | Link to Comment JW n FL
JW n FL's picture

China Trades Renminbi with 1,200% (at least) Leverage.. for Treasuries that have 120% Leverage..

the rational is that China can Service their Debt? by building empty Cities?

America is again being ripped off and ALL the Sheep can say is China is going to own U.S.?

 

the shear level of stupid is fucking stupefying!

Mon, 08/15/2011 - 10:43 | Link to Comment SheepDog-One
SheepDog-One's picture

China is no better off or smarter...theyre just a more brutal dictatorship, for the moment.

Mon, 08/15/2011 - 11:10 | Link to Comment Mountainview
Mountainview's picture

But they don't owe a dime to the US.

Mon, 08/15/2011 - 11:11 | Link to Comment Cdad
Cdad's picture

Exactly, Dog.  And I suspect, as usual, they are the morons buying Euro dollars as if they are a screaming buy...exactly ahead of further revelations that it will be the currency that fails first.

This market is so stupid...stupid as a criminal syndicate Wall Street banker, you might say.  Dumb as a BlowHorn anchor person.

 

Mon, 08/15/2011 - 11:22 | Link to Comment SheepDog-One
SheepDog-One's picture

Im focused on this Jacksons Kornholing event or whatever its called where all the banksters gather....wheres the need for QE? All I see is market euphoria! A couple weeks ago it looked like 'Uh oh, here they go setting up for a BIG market drop....no apparently not just a few hundred points now with todays +200 and Fridays +500....with days like that wheres the panicked bleats for help from the sheeple!

Well anyway Im buying some Vaseline stock before this bankster 'Jackson Kornhole' event whatever it is, sounds like a terrible place to be.

Mon, 08/15/2011 - 11:47 | Link to Comment HellFish
HellFish's picture

Jackson Hole.  Ahhh to have a JDAM...

Mon, 08/15/2011 - 11:48 | Link to Comment Cdad
Cdad's picture

The ZH brotherhood should have planned a gathering there this year.  Wyoming is a great place to be in the summer, and the protesting would have been fun.  

As for what they can do with that meeting...I rather think it is pretty close to nothing, Dog.

Mon, 08/15/2011 - 12:52 | Link to Comment Ricky Bobby
Ricky Bobby's picture

Sheep-  Don't forget to mention the Middle kingdom's 500 million slaves. Damn the rest of the world's elite are just envious.

Mon, 08/15/2011 - 10:40 | Link to Comment silvertrain
silvertrain's picture

dont the fed themselves own the most? If thats the case then one would assume that they also control it..

Mon, 08/15/2011 - 10:41 | Link to Comment monopoly
monopoly's picture

Writing is on the wall and Russia is reading it correctly. China will too, just be patient. It will all come together for us.

Mon, 08/15/2011 - 10:49 | Link to Comment HungrySeagull
HungrySeagull's picture

Russia right now sits on such riches as may be found in resources. They don't need paper to make money.

Mon, 08/15/2011 - 10:47 | Link to Comment Ranger4564
Ranger4564's picture

You want safe haven, may I suggest you look at this?

http://money.cnn.com/2011/08/13/pf/safe_vault_sales/index.htm?iid=HP_LN

There is a more significant message in that article and it's not about safes.

 

Mon, 08/15/2011 - 11:18 | Link to Comment Absinthe Minded
Absinthe Minded's picture

I don't know about spending six months in a vault with people I don't know. What happens when you get a group of 20 or so who decide they are going to snuff a couple out quietly every night to make the food last longer than the six months, just in case. I could see mass chaos and paranoia turning that vault into a cage match that would make the Apocalypse look mild.

Mon, 08/15/2011 - 13:45 | Link to Comment Ranger4564
Ranger4564's picture

Yes, but knowing the probabilities, you could play along like you would enter the vault with them, place a video camera in there, then sell television rights, become a filthy rich producer or something, and forget about the cage, except that there are 20 or so people in there making you a lot of money.  Of course, you come up with some excuse not to enter the cage, just before the need arises, so you can be outside watching the chaos.

Or, you could just put your jewels in there and no one needs to die. 

Your choice.  Either way, you come out on top.  Cool alias by the way... and nice avatar also.  You think you'll need all those 9 lives?

Mon, 08/15/2011 - 10:48 | Link to Comment SheepDog-One
SheepDog-One's picture

Everyone forget about QE3, which has been driving markets for the last 6 months? Wheres the need for QE3 at all, with the DOW comfortably popping +200 every open?

All is well, no QE....well unless theres some HUGE event planned to cause sudden fear and panic and begging for QE because right now theres nothing but total Hindu cow calm out there.

Mon, 08/15/2011 - 10:49 | Link to Comment Everybodys All ...
Everybodys All American's picture

QE3 and more treasury purchases is virtually a given unless of course the market continues down as fear grips all.

Mon, 08/15/2011 - 10:53 | Link to Comment SheepDog-One
SheepDog-One's picture

What? So now QE case is made based upon 'all is well'? Wheres the need for it, if in 5 hours of trading the DOW can climb +700 points? 

QE? Where and why?

Mon, 08/15/2011 - 11:02 | Link to Comment Everybodys All ...
Everybodys All American's picture

It is simply a supply and demand issue. The demand on US Treasuries can only be completed if the Fed is the major buyer. Otherwise expect failed auctions or higher rates.

Mon, 08/15/2011 - 11:13 | Link to Comment SheepDog-One
SheepDog-One's picture

LOL, 'supply and demand' and mad scramble for .01%...yea really awesome man. The FED is the #1 buyer of their own debt....uh huh lets see how long that can roll on for.

Mon, 08/15/2011 - 10:51 | Link to Comment AnAnonymous
AnAnonymous's picture

Good one. So China, that was touted as one of the first rats to flee the US boat, is still on deck, pushing at the wheel to maintain the US world order.

Meanwhile, all the longtime allies no longer show such a dedication.

How to interpret it in a US citizen way?

"China wants the destruction of the US, they hate on us. They are not our friends. They want global hegemony"

"Our lifetime friends and allies are under Muslim, negro dominion, as shown by the evidence they refuse to help us"

Welcome to the US world order, a world order in which the US middle class is bled to death to support the rest of the world.

Mon, 08/15/2011 - 10:52 | Link to Comment RobotTrader
RobotTrader's picture

With the 5-yr. yield still at 0.96% I doubt anybody is seriously worried.....

Uncle Gorilla is enjoying a once in a lifetime opportunity of rolling over short term debt at near zero cost.

And 5-yr. at under 1% must be a total bonanza for the Treasury Dept.

Mon, 08/15/2011 - 10:56 | Link to Comment SheepDog-One
SheepDog-One's picture

Right! No ones worried about anything! Theyve magically discovered that you can just 'roll' your debt at 0%, and fully fund everything, its a fuckin miracle really!  In fact I just heard Obama is changing the name of the country to 'Glitter Rainbow and Loilipop Land'!

Mon, 08/15/2011 - 10:59 | Link to Comment topcallingtroll
topcallingtroll's picture

Compared to the rest of the world we are lolipop land, sheepdog.

You should travel and get out more.

Kisses

Mon, 08/15/2011 - 11:25 | Link to Comment SheepDog-One
SheepDog-One's picture

Uh,....I live in Santiago.

Yea anyway dont get too comfortable there in Lollipop Land people, it doesnt look good, none of the ends are meeting up.

Mon, 08/15/2011 - 11:35 | Link to Comment Steelpulse
Steelpulse's picture

No you are not. Nobody else in the world has 46 million people living on foodstamps, 30 million people unemployed and tent cities popping up in every city like it's going out of style...

Mon, 08/15/2011 - 10:57 | Link to Comment topcallingtroll
topcallingtroll's picture

This can go on a long time if the developed world is all turning japanese.

Policy traction at the zero bound is difficult to accomplish. The bright side is that there are deficits without tears for all....for a while....maybe a ling while.

Mon, 08/15/2011 - 11:02 | Link to Comment SheepDog-One
SheepDog-One's picture

Not designed to go on for a long while, this is in fact the last minute preps for world war kicking off in the mid east by early Sept. Why do people miss these SAME economic wars play out the same JUST before the hot shooting world wars? Duh?

If people think the plan here is to print and pump at 0% so that food stamp and unemployment checks can keep going out forever, youre missing the big picture entirely.

So anyway...everyone ready for Ben to announce 'No QE'?

Mon, 08/15/2011 - 10:59 | Link to Comment Absinthe Minded
Absinthe Minded's picture

On Bloomberg the White House strikes back. What happens when a rating agency tries to do it's job? Well of course it gets accused of math errors, political bias, and now insider trading violations possibly. It's amazing how the MSM plays along and acts so naive. When US is downgraded to AA S&P will probably labelled a terrorist organization.

Mon, 08/15/2011 - 11:06 | Link to Comment SheepDog-One
SheepDog-One's picture

Who cares about the S&P rating, it did no damage except maybe 200 DOW points or so....whoopdee fricken doo!

Yea these present WWE Smackdown script writers arent too imaginative, its a stupid show now really. Theyve always got people setting up for big fights, but they never happen. And just like the WWE when the show is over they all go out for beer and wings and cheese fries.

Tue, 08/16/2011 - 00:13 | Link to Comment boiltherich
boiltherich's picture

It actually did have an effect, but much of it was priced in months in advance as it did not come as much of a surprise.  Of course the bankers fed by the Fed and treasury made up for a lot of the worst of it, but it matters who holds what, a diversified public holding of stocks is a lot more stable than a few major banks and the PPT.

The NYSE has lost about a trillion in market cap, but when the other ratings agencies get off their dead asses and follow suit it will be a lot more serious. 

Did anyone happen to notice the TIC today?  Virtually zero, it well could be negative next report for July. 

Treasury International Capital Released on 8/15/2011 9:00:00 AM For Jun, 2011   Prior Actual Foreign Demand for Long-Term U.S. Securities $23.6 B $3.7 B

Highlights
Selling of US securities by private foreign accounts drove net inflow of long-term securities to a very weak plus $3.7 billion in June vs an already weak and revised plus $24.2 billion in May. Private foreign accounts sold a net $23.0 billion of US long-term securities in the month for the lowest reading on record. Official foreign accounts were an offset at plus $11.5 billion though down from the prior month's $23.2 billion. Foreign demand for US Treasuries, agencies, and corporate bonds was weak across the board though demand for equities was down but still respectable. In a positive, demand for foreign securities by US residents ended a run of outflows with a net $15.2 billion inflow. Low US yields had been pushing domestic investment overseas and limiting investment at home.

But foreign participation in US financial assets is essential for the nation to fund its government and trade debts. And given the effects of the debt-ceiling crisis on investor confidence, the outlook for the July and August TIC reports is not positive. Other details for June show a second straight outflow for total securities which include short-term securities, at minus $29.5 billion vs May's minus $48.8 billion. One positive in today's report is a slight uptick in Chinese holdings of Treasuries, at $1.17 trillion with Japanese holdings only fractionally lower at $911.0 billion.

Definition
These Treasury data track the flows of financial instruments into and out of the United States. Instruments tracked include Treasury securities, agency securities, corporate bonds, and corporate equities.

 

 

Mind you we need to finance twin deficits for trade and for federal budgetary chaos.  $50 billion per month outgo in trade alone, what, $150 billion per month in fiscal deficits, that is 200 billion a month and we had a net of under 4 billion coming in.  So much for the argument that the dollar is being treated as a global safe haven, and this also means that all the money pouring into stocks and debt are domestic, so where is it all coming from?  It is really a clear sign of massive monetization in the trillions. 

Mon, 08/15/2011 - 11:14 | Link to Comment carbonmutant
carbonmutant's picture

The MSM isn't naive, it's complicit....

Mon, 08/15/2011 - 11:27 | Link to Comment Absinthe Minded
Absinthe Minded's picture

That's why I said, "acts naive". They're shitty actors too. Not too worry, the SEC is doing the investigating, and we all know how competent they are at getting to the bottom of things, like Lloyd Blankfein's ass.

Mon, 08/15/2011 - 11:20 | Link to Comment scatterbrains
scatterbrains's picture

These agencies are captured. The downgrade was orchestrated (not that we don't deserve C- )  but apparently debts, ratings, growth.. none of this matters, keep your eye on the dollar ball and try to figure out how they will manipulate the cds markets to either create or take away panic.

 

Mon, 08/15/2011 - 11:13 | Link to Comment robertocarlos
robertocarlos's picture

The USA doesn't need any buyers of paper. They can buy it all themselves which is the same as issuing greenbacks except the Fed and PDs still get a cut.

Mon, 08/15/2011 - 11:16 | Link to Comment SheepDog-One
SheepDog-One's picture

RIGHT why didnt we think of this before? We were SO retarded until a year ago....I mean, HELLO! Who needs all this messy nonsense of actually having a GDP, making textiles and materials and crops to sell to provide ourselves and sell the excess for a profit...fuck it! 

Just buy our OWN 'paper', flip it to ourselves at .01% interest, and VOILA! Totaly vibrant economy for all hell everyone will be a multi billionaire!

Mon, 08/15/2011 - 11:23 | Link to Comment Everybodys All ...
Everybodys All American's picture

Destroying the currency has been the plan and rising commodity prices with potentially massive inflation will be the outcome. Just be patient this does not happen over night.

Mon, 08/15/2011 - 11:27 | Link to Comment SheepDog-One
SheepDog-One's picture

Personally I believe 'inflation' will be the least of anyones worries with whats coming right around the corner.

Mon, 08/15/2011 - 11:36 | Link to Comment Absinthe Minded
Absinthe Minded's picture

Unfortunately, I think you're right. As soon as the rest of the world gets tired of us printing and makes a stand with a coordinated effort to change the reserve currency, it's all over. I just hope they don't do another 12/7/41 or a 9/11/01 to initiate it. We are close, stay away from major cities. I thought the military training in Boston was a set up for it, but who knows, maybe they were setting the charges for a rally the peasants to war event. I wonder who they will blame this time.

Mon, 08/15/2011 - 11:17 | Link to Comment topcallingtroll
topcallingtroll's picture

Excellent point.

We have an implicit greenbackism going here.
Little did I know.

It may work for a while.

Mon, 08/15/2011 - 11:33 | Link to Comment choorles
choorles's picture

STOP! WHAT IS MONEY? The money that the world uses today is created by private banks lending non-existent money called credit. This credit has never, does not and will never exist, except in theory on computer screens. People die and they starve all because they do not have enough digits on a computer screen. All of this credit, created by the private banks, is owed back to those same banks, plus interest. By design, there is never enough credit in circulation to pay back all the principal plus interest on the loans outstanding, which is why the concept of bankruptcy is built into the system.

Using the simple system above, banksters are given the ability to manipulate the world’s economies into ‘boom and bust’ cycles. In essence, the only difference between a boom and a bust is the amount of credit in circulation, or rather, the net amount of numbers on people’s computer screens. Initially, banksters create a boom by increasing the supply of credit in the economy. During this boom period, individuals and businesses are encouraged to take on more debt as they are more confident of increasing their income in the future. All this extra credit in the system leads to more activity, which in turn creates more confidence in the system, with many getting into more debt. This boom is akin to a fishing trawler, the bankster throws out a credit line and waits, once the bait has been taken the bankster begins to wind in the credit by taking credit out of circulation, it’s gone. The economy then moves into a slump or recession, simply because there are not enough units of credit in circulation. The banksters are then able to trawl from people the wealth that does exist, in exchange for money that never existed in the first place.

http://silverrevolucion.wordpress.com/2011/08/14/money-banksters-and-aug...

www.silverrevolucion.com

Mon, 08/15/2011 - 11:38 | Link to Comment Jo
Jo's picture

Please don't anybody tell Cullen Roche and the MMT lunatics over at Pragcap - their fantasy reality might be jolted beyond recovery.

Mon, 08/15/2011 - 11:43 | Link to Comment Paul67
Paul67's picture

Given the recent low Bid to Cover ratio on the 30 yr, my guess is that the UST will lower the amount they are going for in the next cycle.  Eventually, other than ‘maybe’ FED rollovers there won’t be any takers for 30 yr UST.  This process will continue until most US debt (new + roll over) is in low interest short term paper primed as a hyperinflationary powder keg just waiting for black swan event to trigger it.  Say a serious disruption in the flow of oil brought on by an out break of war in the Middle East.

 

Imagine a spread in which paper due in a month is worth three times more than a one year bond?  I suspect this is why the market is moving towards effectively negative interest rates for short term paper since investors at these levels quickly exceed the FDIC insurance if they hold cash in a bank.  At the same time they want quick access to those printed dollars so they can be the first in line to buy up stuff of real value should the time come.

 

In sum the Red horse blazes the trail for the Black horse.

 

Tue, 08/16/2011 - 11:05 | Link to Comment janus
janus's picture

brilliant...but what in the hell are black and red horses?

Mon, 08/15/2011 - 14:12 | Link to Comment janus
janus's picture

looks to me as though russia and china are setting uncle sam up for a classic pincher move:

china yankin us up by the hair, and russia sockin us in the gut.

that riminbi peg sure does come in handy when it comes to destroyin empires...time for another opium war?  we've got them hooked on our debt and their tolerance has reached a gaudy saturation, but can we still demand they maintain their habit?

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