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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Cognitive Dissonance's picture

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

SheepDog-One's picture

Flight to downgraded paper, bitchez.

TumblingDice's picture

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

SheepDog-One's picture

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

No Bid's picture

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

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'.

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!

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.

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....

Johnny Lawrence's picture

Off-topic, but this will no doubt soon be a ZH headline:

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.



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.

slaughterer's picture

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

Sudden Debt's picture

So that 35 billion buys the US how many days?

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.

Ahmeexnal's picture

robo, should I buy the dip on NFLX?

TumblingDice's picture

Does the pope wear a funny hat?

r101958's picture

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

Cash_is_Trash's picture

Is the Popemobile Catholic?

- Cars

WilliamShatner's picture

Who's the bidder, dammit!?

Damn cloaking devices!

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.

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.

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???

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.

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?

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.

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.

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.

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.

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.

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??

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.

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...

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. 
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.

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.

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).

Pete15's picture

Fuck it dude lets go bowling 

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