Treasury Prices $35 Billion In Forgettable 5 Year Auction

Little to note about today's unremarkable bond auction of $35 billion in 5 Year bonds. Hot on the heels of yesterday's just as unremarkable  2 year bond auction, which saw total US debt/GDP surpass 101% two weeks after total debt/GDP rose over 100% for the first time, the details surrounding today's issuance were more or less as expected: the closing yield of 0.90% was inside the When Issued of 0.905%. The Bid To Cover was 2.89, weaker than January's 3.17, but right inline with the TMM BTC of 2.89. The Indirects took down 41.8%, Directs 12.9%, and the Dealers held at 45.3%, all in line with TTM average, so nothing to write home about. Overall an auction that just added a few pips to the total US debt/GDP, with the proceeds, especially by the Dealers, promptly to be pledged back into the repo market with the blessings of BoNY and State Street, where it is never heard from again.

Comments

[Gomie]

Little to note other than it juiced the indices off their lows.

[Ray1968]

And spiked gold up about $15

[glenn17]

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[Chupacabra-322]

Since when are Federal, State and Local "Junk" Ponzi scheme Bonds Guaranteed anyway.  Guaranteed by what?  On Govenernments good faith?  Fuck'm.  Let the Bond Holders and Bankers rot and eat it.  Arrest, try and Execute the Bankers and Politicians. 

[Dixie Rect]

Guaranteed by virtue of Ben's printing press

[bilbao]

Debt/GDP is mostly irrelvant. 

Could it be that people think that a country becomes insolvent when its debt exceeds 100% of GDP?

That would clearly be nonsense. After all, debt (which is measured in currency units) and GDP (which is measured in currency units per unit of time) yields a ratio in units of pure time. There is nothing special about using a year as that unit. A year is the time that it takes for the earth to orbit the sun, which, except for seasonal industries like agriculture, has no particular economic significance.

We should remember this from high school science: always pay attention to units of measurement. Get the units wrong and you are totally befuddled. — Robert J. Shiller

See: Debt and Delusion, by Robert J. Shiller

[Apocalicious]

It is a bit of a confusing metric: one balance sheet item versus one income statement item. I often wonder why debt/assets or annual interest payments/GDP hasn't gained much traction...

[Boxed Merlot]

There is nothing special about using a year as that unit...

This is true for the investor that refuses to believe in the reality that his/her average lifespan is 70-80 orbits.  And while some prefer to think of providing for their posterity for future generation(s), the likelihood remains that the average person will be taking the dirtnap for many more orbits than he/she did breathing air. 

For this reason, I heartily disagree that there is nothing special about a year.  With only 70-80 at one's disposal, they're very special. 

[prains]

http://www.buamai.com/image/46610

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