QUANTITATIVE EASING FAIL
The 30 year treasury auction was a bit of a mess this afternoon:
Accounts are showing Treasury exhaustion, at least for the 30-year bond which has ended a run of strong auctions. The stop-out rate of 4.288 percent was 8 startling basis points above the 1:00 p.m. bid. Coverage was moderate at 2.14 with buyside takedown soft at 37 percent. The refunding is over and just in time judging by how sloppy this auction turned out. With no coupon auctions scheduled for the next two weeks, buyside accounts will have some time to digest this week’s new paper.
Yields spiked to 4.29% – their highest level in 6 months. Bernanke is pushing on a string with the short end of the curve and throwing money down a rat hole on the long end of the curve. We were sort of joking when we said a treasury auction would fail in the next 6 months, but now it’s clear that this is a very real possibility. Sky rocketing treasury yields would surely put a nail in the economic coffin. The “bond trade of the year” is very much alive.
I find it fascinating the confluence of a number of significant factors right now:
-the stress test results (sell the news?)
-approaching the 200 day MA on the indexes
-treasury yields spiking (Ben could sure use a little flight to safety)
-the overbought conditions of so many indicators
-about even for the year (interesting resistance point; many able to get out about even or better with money that's gone in since the fall lows
Hmmm. Bill Fleckenstein is also throwing hints at a possible sell of on the news on Friday too. He's not all knowing but he's a savvy Street veteran
Oh my how is Obama going to cut thhe deficits by half when interest rates are increasing so substantially. They should begin throwing the word nationalization around again so people can run to treasuries.
This is gonna blow up in Team Bernanke / Obama's face. It is going to be spectacular. Holy shit, where's my asbestos trading suit?
He won't. He's going to be playing with some sort of economic sluggishness throughout his entire presidency if he keeps this pace up….
Lets wait and see. I have a feeling this jobs figure might surprise some folks. On the downside….
Its certainly starting to look that way.
TPC, are you going to stop being a pussy and short this bullshit rally. LOL. I'm gun shy and just daytrading right now. SRS burned me bad, SDS a bit. But I'm just trading the ranges and trying to see where we go.
Important “smart” money, I believe is going to be fundamentally worried about this auction and about the “powers” that be in general. Pushing on a string doesn't even do it justice anymore man.
Green shoots, that's all we get for $12T of fucking cash thrown at it. Your grandchildren and my grandchildren are now slaves because of damn bankers that should be in jail, not in the cushy mansions. Ain't it all grand.
This market is gonna break 600 one of these days, even if it takes 2 years.
Also, forgot to mention that ZH had a trimtabs report up saying job losses, truthfully calculated, were over 700k in April. if that's the case then the market, should, have a spectacular down day tomorrow.
Ha. I am focused primarily on my other strategies right now. My intermediate term strat has been mostly cash for a while now. I am getting an itchy trigger finger though. It still doesn't feel right. The bulls are still in control here.
Lying in the grass waiting for the injured calf to walk by….
Yes, I've reduced my “conviction” to what I can handle and retain my daytrading minimums… That's caused some pain. No more convictions until I rebuild the capital. lol. that calf is gonna be walking by soon. i'm with your gut, i think UE is gonna be worse than most think. lot of green shoots today and yet still we sold off. starting to get a bit bolder in the daytrading. but still, TAKE LOSSES, i have to say that every day. all the best man, great blog your topics are some of the best.
Thanks Prescient. Its nice to have good readers like yourself….Good luck!
How long do you think this move will last? I've already made 10% on TBT and cashed out. Any thoughts on how high the yield might go?
I am SO excited for this…
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