Posted on 02/07/2023 11:17:20 AM PST by Kaiser8408a
After Jerome Powell raved about the strong US labor market and oddly ignored the staggering crowding-out of US interest payments on its massive debt, the US Treasury’s 3-year debt auction was … a Hinderburg moment.
First, the high yield at today’s auction of 3-year Treasury notes was 4.073%. This occured as the allotment to brokers and dealers collapsed along with M2 Money growth YoY.
Then we have this horrible chart of the 3Y auction stop through, crashing into uncharted waters. A stop-through indicates when the highest yield the Treasury sold in the auction is below the highest yield expected when the auction began – the “when issued” level.
Here is the rest of the auction story.
(Excerpt) Read more at confoundedinterest.net ...
I remember one FReeper many years ago saying that we are only one failed T-Bill auction away from disaster.............
why would anyone want to loan money to an incompetent, corrupt, bankrupt government?
I have made that comment 3 times since becoming a member many many moons ago...
Market improving for no discernible reason 2003
2008
2015 “prophecies” about “economic disaster”.
A failure to properly value a MAJOR element of the regulatory net capital of EVERY BANK and INSTITUTION in our system would demolish liquidity in hours. No liquidity, no economy.
Maybe it was you, I really don’t remember, it was like 15-20 years ago..........😎
Maybe.
2008 was actually the closest we got to this thing burning down. Our liquidity went nuts when a small component of regulatory capital could not be accurately valued. That was when Asset Backed Securities took the haircuts they did in July 2007; by the time January 2008 rolled around, Auction Rate Municipal bonds were failing to hit minimum bid during auction... Everyone had poorly valued garbage on their own balance sheets and could not acquire any more garbage or anything decent for that matter.
“I remember one FReeper many years ago saying that we are only one failed T-Bill auction away from disaster.............”
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Well if nobody else buys them there’s always some mysterious entity operating out of the Cayman Islands willing to pick up the slack. Don’t ask who it is, you don’t want to know and neither do I.
Run by Idiots for Idiots
T-Bills are great right now. Bought some more today, 6 month yielding 4.87%. I just keep rolling the 3 and 6 months as they mature. I’ll go longer when the 2yr-10yr area seems to be peaking. Stocks will start to be competitive by then so it will get interesting. For now, these no risk-no tax returns are just fine.
I’m also in a Bond Fund that covers all maturities, been in it for years, it’s on auto-pilot. Going with the flow.
“2008 was actually the closest we got to this thing burning down.”
Yes, a lot of reforms and backstops in the system were implemented when that happened.
What does this mean to the exchange rate of the dollar? Anyone able to decipher this?
right?
That’s a comforting fairy tale.
I have been in the industry since 1990.
I saw money getting to the same level of stupidity in 2019 - 2021 that it got to in 2004-2006.
And the market players that have senators of both parties on the payroll are still doing whatever the hell they want to. They know if they f-—k things up again, their staff members will bluster and scream and then bail them out while their buddies at the Fed print out enough liquidity to drown everyone’s sorrows...
“In the long run, we’re all dead.” - Sir Keynes.
The one thing an economist has ever said that is straight up fact.
I’m always amazed at how people think this crazy money generation is going to end well (not you)
I believe a repeat of 2008 is coming
About a month after I made my original reply, we watched 3 banks go buh-bye over investment valuations, lack of liquidity, and capital impairment because of the adverse valuations...
Still feel good about your reforms and backstops? LOL
‘Cuz I feel just as bad about the greed and poor risk management in my industry! NOT LOL
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