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Yet Another Direct Bidder Avalanche Pushes $35 Billion 2 Year Auction Through The Finish Line

Tyler Durden's picture




 

Just like in previous auctions post the end of QE2, so today's just concluded $35 billion 2 Year auction closed off with Direct Bidders once again surging to take down nearly as much as the Indirects. Foreign institutions (Indirects) were responsible for 27.67% of the total allocation, while Directs rose from 13.53% to 20.03%: Chinese proxies, Fed, who knows. It wasn't dealers, who supposedly took down just over half or 52.30% of the auction. Otherwise, the bond priced at a 0.417% high yield, modestly higher than June's 0.395% same with the Bid To Cover, which came at 3.14, just higher than the 3.08 previously. With the When Issued trading at 0.42% there were no major surprises into the pricing. Overall, nothing notable except for the increasing role that Direct Bidders continue to play in each and every issuance now that the Fed is briefly not monetizing treasury debt. We expect more of the same in the remaining 5 and 7 auctions in the balance of the week.And an amsuing comment from TD's Richard Gilhooly: "Given the bid in the Treasury market today as spreads widen in Agency paper and mortgages, belatedly in swap spreads, it would suggest that we are seeing an ironic flight to quality into the asset class that is at risk of downgrade." Yeah, who cares though.

 

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Tue, 07/26/2011 - 13:18 | 1495020 Cognitive Dissonance
Cognitive Dissonance's picture

I imagine the emperor is getting one hell of a sunburn under those pretty new clothes.

http://deoxy.org/emperors.htm

http://en.wikipedia.org/wiki/The_Emperor's_New_Clothes

Tue, 07/26/2011 - 13:17 | 1495026 SheepDog-One
SheepDog-One's picture

Flight to downgraded paper, bitchez.

Tue, 07/26/2011 - 13:19 | 1495038 TumblingDice
TumblingDice's picture

The market is pricing in a harmless resolution to the debt ceiling drama.

Tue, 07/26/2011 - 13:37 | 1495112 SheepDog-One
SheepDog-One's picture

'Harmless' yea as in the dollar plunging, oil and other commodities surging. Totaly harmless.

Tue, 07/26/2011 - 13:49 | 1495148 No Bid
No Bid's picture

The normal state of the dollar is "plunging" though.

Tue, 07/26/2011 - 13:58 | 1495186 SheepDog-One
SheepDog-One's picture

We'll see how normal the state is when gas is rising to over $5 due to the only answer to anything is 'print more money'.

Tue, 07/26/2011 - 14:12 | 1495228 Cash_is_Trash
Cash_is_Trash's picture

Don't kill the Dollar just yet! - I like the cheap PM prices.

73.5 on the DXY, thanks Ben & Tim!

Tue, 07/26/2011 - 13:51 | 1495158 TumblingDice
TumblingDice's picture

The resolution of the debt ceiling drama is not the source of that harm. You know that as well as I do.

The drama goes on in the Capitol building while the source resides on c street, between 21st and virginia.

Tue, 07/26/2011 - 17:53 | 1496048 smlbizman
smlbizman's picture

there is no market, this is just more illusion to "look how secure we are" ...they are buying the majority of debt  threw different conduits to create this magic act....

Tue, 07/26/2011 - 13:19 | 1495041 Johnny Lawrence
Johnny Lawrence's picture

Off-topic, but this will no doubt soon be a ZH headline: http://www.foxbusiness.com/markets/2011/07/25/obama-to-banks-were-not-de...

Obama to Banks: We're not defaulting

While officials from the Obama Administration raised their rhetoric over the weekend about the possibility of a debt default if the debt ceiling isn't raised, they privately have been telling top executives at major U.S. banks that such an event won’t happen, FOX Business has learned.

In a series of phone calls, administration officials have told bankers that the administration will not allow a default to happen even if the debt cap isn't raised by the August 2 date Treasury Secretary Tim Geithner says the government will run out of money to pay all its bills, including obligations to bond holders.

This guidance is a big reason why Wall Street has largely dismissed the possibility of default, and though the markets have been jittery amid the talk of default, they haven't imploded as would be the case, many economists fear, if the nation missed a payment on its debt.

 


 

Tue, 07/26/2011 - 13:28 | 1495070 SheepDog-One
SheepDog-One's picture

More like the banks told Obama.

Meh....who are you gonna believe?  Dagong Rating Agency: "The US Has Already Defaulted" | zero hedge

Tue, 07/26/2011 - 13:28 | 1495073 Cognitive Dissonance
Cognitive Dissonance's picture

.........they privately have been telling top executives at major U.S. banks that such an event won’t happen, FOX Business has learned.

Extralegal renditions have turned into extralegal debt ceiling raising. It's good to be King Obama.

Tue, 07/26/2011 - 13:21 | 1495051 slaughterer
slaughterer's picture

Isn't Obama telling the banks the nation is not defaulting insider trading?   

Tue, 07/26/2011 - 13:25 | 1495059 Sudden Debt
Sudden Debt's picture

So that 35 billion buys the US how many days?

Tue, 07/26/2011 - 13:26 | 1495063 RobotTrader
RobotTrader's picture

 

 

- China

- Japan

- UK

- Taiwan

- Korea

A plethora of buyers willing and able to scarf down Uncle Gorilla Notes paying a paltry 41 b.p.

I doubt anybody overseas is stupid enough to stop buying and stop the massive worldwide Ponzi Scheme.

How many tons of gold would $35 billion buy, anyway?  I guess these fools think paper is where its at.

The game goes on and on.

Tue, 07/26/2011 - 13:28 | 1495071 Ahmeexnal
Ahmeexnal's picture

robo, should I buy the dip on NFLX?

Tue, 07/26/2011 - 13:33 | 1495097 TumblingDice
TumblingDice's picture

Does the pope wear a funny hat?

Tue, 07/26/2011 - 13:47 | 1495147 r101958
r101958's picture

Does the Pope look down on the unemployed? ooooops...sorry, couldn't help it.

Tue, 07/26/2011 - 14:14 | 1495254 Cash_is_Trash
Cash_is_Trash's picture

Is the Popemobile Catholic?

- Cars

Tue, 07/26/2011 - 13:38 | 1495117 WilliamShatner
WilliamShatner's picture

Who's the bidder, dammit!?

Damn cloaking devices!

Tue, 07/26/2011 - 13:46 | 1495141 SheepDog-One
SheepDog-One's picture

None of OUR business apparently...and I highly suspect that bidder behind the curtain is none other than Ben Shalom Bernank himself.

Tue, 07/26/2011 - 14:07 | 1495224 topcallingtroll
topcallingtroll's picture

The chinese have to buy whether they like it or not. They are just trying to save face and avoid attention both at home and in the usa.

They will always buy. Never fear. I have been consistently right about treasuries. Maybe someday the naysayers will be right.

Tue, 07/26/2011 - 13:52 | 1495142 BaBaBouy
BaBaBouy's picture

Everything is Maniped...

 

What a fucking joke.

 

As soon as the NY paper Gold market closed, Gold moved up.

 

Entire USA capital markets a Giant Interwoven Ponzi Scheme???

Tue, 07/26/2011 - 13:59 | 1495189 Hedgetard55
Hedgetard55's picture

Listened to Boner on Rush just now. Zero Hedge was right - it looks like Boner will fold, there will be no tax hikes, no significant spending cuts, and Obambam gets 1.2 trillion in debt ceiling raise until next March. And some stupid super Congress to make more cuts in the future (sure).

The dollar will get reamed, as will J6P.

Tue, 07/26/2011 - 14:24 | 1495281 johny2
johny2's picture

Boner is folding as he has no support even from his own party. You are right about dollar though, it is about to undergo another revaluation, maybe another 10%, if lucky?

Tue, 07/26/2011 - 14:00 | 1495191 johny2
johny2's picture

Tomorrow there is going to be a failed vote on Boehner plan, and so on thursday there is going to be all or nothing vote on Reid plan. Treasuries should be sinking as fast as dollar is.

Tue, 07/26/2011 - 14:03 | 1495204 topcallingtroll
topcallingtroll's picture

People forget that the market is the ultimate rating agency. It eventually even saw through the lies, fraud, and political spin in europe and downgraded greek debt before the rating agencies. The market predicted greece would be shut out of the private debt market before anyone else would admit it.

The market sees thru the debt ceiling non problem and has given the usa a high rating. Respect the market. Obama has now said he will cave in.

Tue, 07/26/2011 - 14:31 | 1495302 djcando
djcando's picture

These results and the performance of the stock market today, just don't add up.  I'm reminded of rearranging the deck chairs on the maiden voyage of the Titanic.

Tue, 07/26/2011 - 14:51 | 1495371 The Count
The Count's picture

Interesting analogy to the Fed probably directly buying treasures, even if masquaraded...

Would it be sex (gay sex?) if you had a shlong so long you could give it to yourself up the pooper?

Thats exactly what our government has been doing. Bastards.

Tue, 07/26/2011 - 14:56 | 1495402 adr
adr's picture

It doesn't matter anymore. I don't think the ponzimatic express can be stopped. Every government in the world knows the global economy is built on vapors so none of them will allow the bubble to pop. The only thing that can stop this mess is outright revolution but there aren't enough right thinking people to accomplish the task.

The vast majority of Americans have been so dumbed down that they can barely count change. Those that do care look at the situation and have realized they can't do anything to stop it. They tried to vote out Reid but the election manipulators stepped in and made sure he wouldn't lose.

The only solution is the forced privatization of every publicly traded corporation and the wholesale destruction of the stock market. It has lost all relevance to the economy and is actually a hindrance to real growth. How many Fortune 500 corporations could actually stand as private institutions? Three or four?

Capitalism only works with failure. They have tried to remove failure in all forms and ironically doomed the entire system in the process.

Tue, 07/26/2011 - 16:07 | 1495726 alexanderstollznow
alexanderstollznow's picture

so, another post - QE2 auction going off well.  i sure hope this continue, or someone is going to be scratching to keep coming up with excuses as to why there hasnt been a jump in yields since the big buyer isnt there to flip the issue to then next day.

who would have predicted it??

Tue, 07/26/2011 - 16:11 | 1495745 alexanderstollznow
alexanderstollznow's picture

BaBaBouy (Total Score:1)

Everything is Maniped...

 What a fucking joke. 

As soon as the NY paper Gold market closed, Gold moved up.

 the gold market doesnt close during the week. it is trading 24hour as spot gold, and millions of CFD accounts.

Tue, 07/26/2011 - 16:17 | 1495764 web bot
web bot's picture

This won't last... keep buying either physical silver/gold or bullion backed funds like Sprott who hole physical at the Canadian Mint (which is not leased out). The government has no other choice but to say what they say, otherwise we have massive social unrest.

We won't have to wait years until the great meltdown is upon us...

Tue, 07/26/2011 - 16:21 | 1495780 alexanderstollznow
alexanderstollznow's picture
  djcando (Total Score:1)
results and the performance of the stock market today, just don't add up. 
  why doesnt it add up?  the stock market is doing ok because company earnings have been beating expectations every quarter. that has been occurring partially due to lower funding costs and not paying wages for the extra millions who dont have a job.  it doesnt mean that everything is hunky dory, as it isnt, but nor does it mean there is something out of line about stock prices. 
Tue, 07/26/2011 - 17:19 | 1495968 djcando
djcando's picture

Housing performance - down, Stock market - down, Gold - up/stable, Bond auctions - questionable, Responsive/responsible government actions - missing, Consumer sentiment - up.  I'm confused!  While company earnings are doing OK most people I know are struggling.  What happens to earnings when the government has to pay the credit card bills and the rubes can't keep buying?  It's not going to be pretty here and will be very interesting in the PROC.

Tue, 07/26/2011 - 19:47 | 1496339 Buck Johnson
Buck Johnson's picture

Who would of thought a year ago that this would be going on and to the last minute.  I think this is our blackswan event.

Tue, 07/26/2011 - 22:27 | 1496649 mailll
mailll's picture

The Elite are just secretly pumping money into the bond and stock markets just until after the debt ceiling is reached.  This is so no one will be concerned about either of them. A false sense of security.  Then they pull the plug on both and everything collapses, a controlled demolition of our bond and stock market. Just like what happened in the fall of 2008 when they flooded the economy with easy money for 10 years or so prior, and then pull the plug on it.  Everything collapsed.   (Just my theory, but it could happen again).

Wed, 07/27/2011 - 06:02 | 1497055 Pete15
Pete15's picture

Fuck it dude lets go bowling 

Tue, 08/23/2011 - 22:50 | 1593326 karmete
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