Treasury To Sell 10 Year Bonds At Record Low Yield Two Hours After Fed Buys... 10 Year Bonds

A month after the US Treasury sold $24 billion in 10 Year bonds at what was then a record low yield of 1.86%, the US government once again approaches that mysterious primary dealer-repo nexus with the latest offer US banks can't refuse: a $21 billion reopening. What is notable about today's auction is that in about 40 minutes, the auction will price at a record low yield of just about 1.63%, or 23 bps lower to the last record yield.

So far so good: after all the global economy is once again collapsing (but don't look at US stocks for validation: they only indicate whatever Brian Sack wants them to indicate). Where things get patently surreal, however, is when one takes a look at today's POMO operation conducted by the Fed (remember those). Because as can be seen on the table below from the NY Fed, at 11 am today, so precisely 2 hours before when the Treasury will complete its own sale, bought $4.8 billion of... wait for it... 10 Year bonds.

To summarize:

  • At 11:00 am Fed buys $4.8 billion in 10 Year bonds
  • At 1:00pm the Treasury sells $25 billion in 10 Year bonds

Only in non-monetizing America, ladies and gents.

h/t Bill Gross