The moment many of us have been waiting and preparing for happened last week – it happened quietly but surely. Are you prepared for the Real SHTF events coming; now that last week’s event happened?
What was that event, you ask?
Well the Fed had the largest bond/T-bill auction last week. Which as you know that is the U.S. debt that is put up for auction for investors and countries to buy. Of course China has always been right there, staying behind the U.S. and purchasing our debt. There have been threads I and others have done about China being worried about the U.S. debt, besides wanting to attach inflation to the dollar.
When the first two auctions happened – I was searching everything I could about them.
I found this article right after them:
link - http://market-ticker.denninger.net/archives/1267-US-5yr-Bond-Auction-Effectively-FAILS.html
And here's the math:
1.923 BTC X 61.59% Primary Dealer bid = 1.18 BTC (PD), greater than 1.0. Or to put it a different way, but for the primary dealers the bid-to-cover was less than one, meaning that some of the issue would have been left on the table.
Thats a fail; but for the primary dealers the issue would not have subscribed.
Primary dealers are required to bid. That's the deal in exchange for their being named as "primary dealers." For this reason short of thermonuclear war you will never see an actual (BTC < 1.0) "fail" on a US Treasury Auction - Treasury has rigged the process so as to insure that cannot be reported.
Therefore, the question is this: Less the primary dealer "bid" (forced by agreement) was there sufficient interest to subscribe the issue, and the answer is NO.
Those who think this is "no big deal" need to have their head examined. In general any BTC under 2.0 indicates a serious problem, and the perverse nature of the primary dealer system is the reason.
The United States' Credit Card (issued by China and Japan) is being slowly cut off. That the stock market "recovered" after this ridiculously bad auction (bow-wow is the best way to describe it) speaks to the vacuum between the ears of both the cheerleaders in the mainstream media and those in the equity markets.
There is only one other time in recent memory that we've had a bond market auction fail like this. You might want to go have a look at your charts - with dates - for what followed shortly thereafter.
They're going to try to sell 7yrs tomorrow, and then the real fun begins with the quarterly refunding. That ought to be a real riot.
The next day – I began searching for the results of the 7 year bond sale.WOW – amazing, you would never guess what I found…… the 7 year auction went Fabulous!
My first thought was B.S!!!! There is NO way that a 7 year Fed bond auction would go better than the 5 year! I decided to keep hunting on WHO purchased those 7 year bonds, because to me – it did not smell right!
Link to 7 year bond auction info:
http://www.forbes.com/feeds/afx/2009/07/30/afx6721827.html
Oh please notice the place a PTB company is the one who released how well it went.
NEW YORK, July 30 (Reuters) - Though the stellar seven-year auction creates a positive tone ahead of the refunding, anxieties created by unimpressive two- and five-year auctions this week will linger as long as the market sees a growing load of debt headed its way.
At Thursday's auction, seven-year demand overall was above average, measured by the bid-to-cover ratio of 2.63. A gauge of foreign and institutional investor interest, the indirect bidder category, was stellar at more than 62 percent.
In another sign of strength in the auction, yields were below expectations, gauged by trading in the when-issued market. In contrast, two- and five-year auction yields came in above market expectations, which is known as a 'tail.'
'Overall it was a pretty good operation. There seems to be a lot of appetite, given where yields are, for notes in the belly.'
The two-year sale was lackluster and the five-year auction went downright poorly before the seven-year marked a recovery.
Notice this month will bring the 10 and 30 years bond sales.
Once I read how well the 7 year went, I thought “sure it did, the Fed lined up their cronies to purchase the debt”. I also thought “ the Fed is probably the one buying the debt themselves”.
I wanted to find out more, because the Fed, would need to cover up the fact NO ONE has confidence in the U.S or the dollar anymore. Also, I wanted to know if China purchased bonds.
So, yep…. More research was needed. Guess what I found?
What was that event, you ask?
Well the Fed had the largest bond/T-bill auction last week. Which as you know that is the U.S. debt that is put up for auction for investors and countries to buy. Of course China has always been right there, staying behind the U.S. and purchasing our debt. There have been threads I and others have done about China being worried about the U.S. debt, besides wanting to attach inflation to the dollar.
When the first two auctions happened – I was searching everything I could about them.
I found this article right after them:
link - http://market-ticker.denninger.net/archives/1267-US-5yr-Bond-Auction-Effectively-FAILS.html
And here's the math:
1.923 BTC X 61.59% Primary Dealer bid = 1.18 BTC (PD), greater than 1.0. Or to put it a different way, but for the primary dealers the bid-to-cover was less than one, meaning that some of the issue would have been left on the table.
Thats a fail; but for the primary dealers the issue would not have subscribed.
Primary dealers are required to bid. That's the deal in exchange for their being named as "primary dealers." For this reason short of thermonuclear war you will never see an actual (BTC < 1.0) "fail" on a US Treasury Auction - Treasury has rigged the process so as to insure that cannot be reported.
Therefore, the question is this: Less the primary dealer "bid" (forced by agreement) was there sufficient interest to subscribe the issue, and the answer is NO.
Those who think this is "no big deal" need to have their head examined. In general any BTC under 2.0 indicates a serious problem, and the perverse nature of the primary dealer system is the reason.
The United States' Credit Card (issued by China and Japan) is being slowly cut off. That the stock market "recovered" after this ridiculously bad auction (bow-wow is the best way to describe it) speaks to the vacuum between the ears of both the cheerleaders in the mainstream media and those in the equity markets.
There is only one other time in recent memory that we've had a bond market auction fail like this. You might want to go have a look at your charts - with dates - for what followed shortly thereafter.
They're going to try to sell 7yrs tomorrow, and then the real fun begins with the quarterly refunding. That ought to be a real riot.
The next day – I began searching for the results of the 7 year bond sale.WOW – amazing, you would never guess what I found…… the 7 year auction went Fabulous!
My first thought was B.S!!!! There is NO way that a 7 year Fed bond auction would go better than the 5 year! I decided to keep hunting on WHO purchased those 7 year bonds, because to me – it did not smell right!
Link to 7 year bond auction info:
http://www.forbes.com/feeds/afx/2009/07/30/afx6721827.html
Oh please notice the place a PTB company is the one who released how well it went.
NEW YORK, July 30 (Reuters) - Though the stellar seven-year auction creates a positive tone ahead of the refunding, anxieties created by unimpressive two- and five-year auctions this week will linger as long as the market sees a growing load of debt headed its way.
At Thursday's auction, seven-year demand overall was above average, measured by the bid-to-cover ratio of 2.63. A gauge of foreign and institutional investor interest, the indirect bidder category, was stellar at more than 62 percent.
In another sign of strength in the auction, yields were below expectations, gauged by trading in the when-issued market. In contrast, two- and five-year auction yields came in above market expectations, which is known as a 'tail.'
'Overall it was a pretty good operation. There seems to be a lot of appetite, given where yields are, for notes in the belly.'
The two-year sale was lackluster and the five-year auction went downright poorly before the seven-year marked a recovery.
Notice this month will bring the 10 and 30 years bond sales.
Once I read how well the 7 year went, I thought “sure it did, the Fed lined up their cronies to purchase the debt”. I also thought “ the Fed is probably the one buying the debt themselves”.
I wanted to find out more, because the Fed, would need to cover up the fact NO ONE has confidence in the U.S or the dollar anymore. Also, I wanted to know if China purchased bonds.
So, yep…. More research was needed. Guess what I found?