CBs And Other "Real Money" Had Enough?

Market Ticker ^ | 05/21/09 | Karl Denninger

[TigerLikesRooster]

CBs And Other "Real Money" Had Enough?

Oh oh......

From the forum, wire from Reuters claimed original source:

21. There apparently is a new wrinkle to the intermediation trade between buying from Treasury to sell to the Fed with real money, including central banks, now in on the act. Indeed, several Street sources relay central banks were aggressive offers into this morning's coupon pass, with one letting go of a large block of old 5-years. Other offers too are coming in from embedded Asian real money longs -- in the higher coupons -- also looking to sell size without unduly upsetting the market, and especially considering the illiquidity in off- the-run bids from the Street.

Whether influenced or not by the much higher tenders coming in on the Fed Passes ($45 bln tendered for $7.4 bln bought in today's pass for a 16.2% hit rate), fast money has been tattooing the bid and especially so in the belly with the 10-year most leaned on. Note as well, earlier this week the Bank of England (BoE) gilt pass too saw a need to offer paper at or below the market's bid side in order to get sales off.

So now what Ben?

If Foreign Central Banks are selling into Ben's bid then the game is literally weeks or even days away from being over.

I have written for over a year about the potential for a bond-market implosion and subsequent economic collapse.

[NeoCaveman]

Good point Dave. They can issue callable bonds. I do not believe they are issuing those now, though. They only issue those when there is a chance to refinance them into lower rates.

No chance of that in the future. IMHO

[NVDave]

Right — as of today’s historically (abnormally) low rates, they’re not issuing callable paper (that I know of yet).

[I got the rope]

I just saw this...unbelievable.