World Gives Uncle Sam A Five Year Loan At Record Low Yield

Tyler Durden's picture

It may not be quite the 0% coupon which Germany got yesterday for its 2 year bonds (soon realistically going negative if the demand is there), but lending $35 billion to Uncle Sam at a cash interest of 0.625% and a record low yield of 0.748% is still quite remarkable. Because with this auction, total US debt/GDP is now almost 103% (rounded up). But who cares: when one needs to parks cash in a hurry, one will do just what the herd is doing, consequences of groupthink be damned. The internals: 2.99 Bid To Cover, higher than the TTM average of 2.924%, but of note was the slide in Indirect Bidders which bought "only" 42.6% of the auction, and Directs, who only purchased 6.5% of the total. This means that for the first since June 2011, Primary Dealers, who promptly take the proceeds and flip it for cash into the limbo that is the custodial repo market, amounted to over half of the total takedown, or 50.9%: hardly a ringing endorsement when one strips away the ponzi apparatus that is the PD bid. That said: Uncle Sam will take it, and will certainly take another $29 billion in 7 year bonds tomorrow, which will also likely price at an all time low yield.

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goldencross10's picture

We are soon going to be paying the Govt to hold our $....wait...


Thank you sir, can I have another. 

NotApplicable's picture




WezTheJuic's picture


BUT, can it OR is it being used as that transitional point to not only "flush out" so much crap, but to also re-instill that basic system that once was?

The tide and flow is very interesting and real.

The processes within the processes, and yes, the processes within those processes, and yet of that process.





eclectic syncretist's picture

Let the good times roll.


Wait!  Can't these bonds now be used as collateral for issuing student loans or mortgage originations or something economically beneficial like that?

odatruf's picture

The government is already doing too much of both - as well as many many other things.

veyron's picture

Are TIPS negative yield yet?

TonyCoitus's picture

The 5 and 10 year TIPS yield are negative.

LawsofPhysics's picture

Yes, and if you really believe that this or ZIRP truly reflects the cost of creating capital (especially without adding any real value), then I have a couple of bridges to sell you.  ZIRP can work for one country when the rest of their trading parters are doing well, but it won't work for the whole world, which is where we are in reality.  Without clearing the bad debt, the BRICs will simply be throwing good money after bad (already are).

fourchan's picture

its all down hill from here

Ahmeexnal's picture

lemmings about to fall off the cliff

VonManstein's picture

one thing ive learnt in my limited time speculating on paper PMs and investing in phyz.. most people are completely stupid and i have to constantly assess my action to make sure i am not becoming on of them.. had a few close calls i must say.

im buying this dip phyzz and paper!

yes im religious

sudzee's picture

100 yr .00003% coming soon.

francis_sawyer's picture

I spent my portion already (on hookers & blow ~ by proxy)...

junkyardjack's picture

And they said that US Debt is a problem, wasn't there some guy saying we could easily manage 130% before things started getting shaky? I forget his name, could have been an economist. Smart guy...

JackInTheBox's picture

I think I will follow the Onion's advice on investing.  After all, debt is money, right?  And we are by far the "richest" country in the world.  So we have that going for us...

Bones265's picture

OBAMA to take credit that he just cut the deficit without congress, reduced inflation, reduced oil prices and took over Europe for a bag of baseballs.


ptoemmes's picture

The World?  I wanna know how muh the Chinese bought - direct (for a while now):

scatterbrains's picture

What happens to the price of a 3x inverse bond etf when the underlying goes negative yield ?

JustObserving's picture

5 years at 0.625%?  The dollar may not survive that long.  Heck you can scalp 2 or 3% in a day in silver (you could make 4% in SLW just today in 4 hours). The sheeple are really, really scared.  Scared stupid.

Jean's picture

All I can say is thank you world (unless we bought these ourselves again).

mayhem_korner's picture



Moving from the bow (Euro) to the aft (UST) of the Titanic, nothing more.

Al Huxley's picture

I know this idea's been raised before, but I think it deserves to be brought up again - given the infinite appetite for US debt, why not just do away with taxes altogether, and just fund everything with debt?  How great would that be?  Everybody suddenly flush with money, ready to load up on more shit from China, China's economy booms, and everybody can get as much paper as they want.

Motley Fool's picture

That is precisely what the MMT guys are advocating afaik.

ATG's picture

With the resultant triple digit cost of living increases destroying the dollar even more aggressively than now?

Not a great plan Stan.

Why not just snort meth too...?

Al Huxley's picture

So I still need to add the '/sarc' annotation...

NotApplicable's picture

Or upgrade your avatar to a double-facepalm.

Sophist Economicus's picture

The Fed is the only one buying the marginal flow. 

youngman's picture

It amazes me that they sell...and sell..and such a low interest rate...I could see 5-7%....but this % way....30 years ago they would not...but the new Econ we are living in has broken all of the old rules...there are no longer Bond vigilantes....just the Central banks up and up we go...soon 300% to GDP...and 100 million on food stamps...and only 50 million working...and 20 million paying

newworldorder's picture


Never thought I would contemplate this, but maybe Chaney was right - Deficits no longer matter. Our Ivy League trained economists are truly a wonder to behold.

ATG's picture

Re Record New Low Treasury Yields (TNX Targeting 1% and the USD targeting 94)~


There is no clearer evidence we are in galloping depression neocons hope to offset with war profiteering inflation at the expense of human lives, our economy and our fiat currencies:


Buy the right silver or suffer:


monopoly's picture

Just beyond words. How scared are they? And they are too stupid to buy gold, silver, miners at these absurdly low prices. Amazing.

fuu's picture

And we have lift off!

Whew daily funding crisis over, now on to green!

monkeyfaction's picture

I shorted the 10Y on Friday. Was looking good Monday and tuesday. Today not so much.

Won't take much good news to get a nice sell off from here though.

Meremortal's picture

Great opportunities to make money just keep happening. I'm going to start being a little more careful, it's been too easy lately. Don't need to get my head handed to me now. I'm cashing out some of the winners and going looking for more farmland. Texas and Colorado land (my current holdings) are too expensive, got to look somewhere else, maybe Kansas. Still need to buy a house in Arizona too, I'm like a flea over an elephant trying to figure where to take my next bite.


machinegear's picture

lending $35 billion to Uncle Sam at a cash interest of 0.625%

Did we get the additional $500 dollars bonus cash too?

Pancho Villa's picture

0.748% for 5 years?! They should call them lemming bonds. They are like buying a space in the line to jump off the cliff.

There will come a time when people will look at these with the same sense of amazement that we feel when we look back on the dotcom bubble.

NotApplicable's picture

Five years from now though when it matures, and the five year yield is down to 0.0748% (or 0.00748%) you'll wish you still had that "generous" offer from the Treasury.

This game does not end until all sovereign rates are zero (or "we" are at war with those usurious evildoers who steal our free credit by paying interest to terrorists as a way to destroy western economies).

ZIRP is the word. TINA told me so.

Pancho Villa's picture

Even if inflation doesn't spike in the next 5 years, my money would probably be worth 15% less then. Whereas if I buy alchol, food, firewood, or any other things that are storable and that I normally use I would not lose any purchasing power.

And if inflation picks up in the next 5 years my money might be worth only 50%, maybe even 25% of what it was when I bought the bond. The miniscule yield that they are currently paying isn't worth the risk. And consider that the miniscule yields that they are paying are taxable, so you aren't even getting .75%.

skepticCarl's picture

All of the economic boats are foundering in the same debt storm, but some, like Greece, are in the process of sinking.  So the big, but listing hulls of the U.S. and German economies look like safe havens for the Greeks and Spaniards.  These artificially low interest rates in Germany and the U.S. are primarily the result of the desperation of the most imperiled, but won't last forever, as the last remaing economies afloat succumb to the same storm.

web bot's picture

So what happens when interest rates are FORCED to rise... and all the short term paper is rolled over? I understand that 60% of US gov't debt is under 3 years. What happens then?

newworldorder's picture

Interest rates rise? Surely, you must be an economic heretic.

Troublehoff's picture

Just wondering how there is still demand for zero coupon German bonds... Why would people not just hold hard euro currency instead?


It's obvious! It implies that Bund holders will receive their pricipal back in Marks that should remain stronger than the devalued Euro.

devo's picture

Who the hell is buying these bonds?

Morrotzo's picture

Christ almighty, 7 year bonds with less than 1 percent yields. 29 billion "worth" of 'em and no shortage of suckers to purchase 'em.

Let me tell you something right now that has been going up like a rocket and isn't ever going to go down any time soon.It'll also save your ass when the Shit Hits The Fan/Interest Rate Hike/End of the World As We Know It/Day The EBT Cards Stop Working scenario pops off.

Firearms and the ammunition for them are the best investment you can make right now. Get a pistol, revolver, rifle and shotgun in common ammos and have plenty of ammo for 'em. Beats the shit out of buying bonds that cannot even come close to matching a true inflation rate of 8 to 10 percent. Beats the SHIT out of being a muppet and doing dumbass shit like "getting in on Facebook at any price." Everybody should have a 9mm/.40 S&W/.45 ACP, a .357 Magnum, a 12 gauge and a .30-06. Fucking government bonds and Ben Bernanke Federal Reserve Toilet Paper are done. Ditch that shit and get armed.


AGuy's picture

Of course Interest rates are at rock bottom. The gov't is buying its own debt. The primary dealers borrow from the Fed to buy US treasuries and make a profit with a carry trade. Bernanke has dictated that interest rates will remain low until at least 2014. Wait another 6 months and he will say raise will stay at zero until 2015. This will repeat for years to come. The gov't can't afford to pay real interest rates on its debt, so either rates remain at zero, or the US gov't defaults.