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Treasuries fall as five-year auction deemed a flop - No One Wants US's Debt?
yahoo.reuters.com ^ | 2/23/06 | Pedro Nicolaci da Costa

Posted on 02/23/2006 11:18:59 AM PST by tmp02

This is not a good sign for stocks, is it?

..."It was a terrible auction," summed up one trader at a U.S. primary dealer. "The bid-to-cover stank, the indirect bid was bad -- I would be surprised if the market manages to rally from here."

... Worse yet, indirect bidders bought a meager $2.96 billion or 21.1 percent of the deal, compared with last year's average 38.13 percent. That left dealers holding the bag with $10.72 billion or 76.6 percent.

Signs of a tightening labor market had taken an early toll on Treasuries, with jobless claims receding to levels consistent with solid employment growth.

Claims fell by 20,000 to 278,000, when analysts had looked for a slight increase.

Given the Fed's worry that the economy is running near full capacity and could therefore generate more troublesome inflation, the data suggested the central bank will continue to tighten monetary policy.

(Excerpt) Read more at yahoo.reuters.com ...


TOPICS: Business/Economy
KEYWORDS: debt; econnuttery; fearmongering
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To: CROSSHIGHWAYMAN

Your CD's will be earning 5.5% by this time next year...


41 posted on 02/23/2006 12:01:55 PM PST by antaresequity (PUSH 1 FOR ENGLISH, PUSH 2 TO BE DEPORTED)
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To: antaresequity
Your CD's will be earning 5.5% by this time next year...

And everybody was wondering why I sold 50% of my stocks last month..........

42 posted on 02/23/2006 12:06:01 PM PST by CROSSHIGHWAYMAN (Toon Town, Iran...........where reality is the real fantasy.)
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To: tmp02
From a service I subscribe to:

"The market has seen the life sucked out of implied volatility levels across the board, with at-the-money June straddles pricing options (that expire in 92 days, which is over 3-months...nothing can happen in 3-months) in 5-yr futures at 2.8%, 10-yrs at 4.1% & 30-yrs at 6.8% as of the open today. The 2-yrs? Too depressing to mention (ahem, sub 2%). Bloomberg, using a different measure, points out that there has been a 20% drop in the past 2-weeks in expected yield range on treasuries over the next 12 months. They go on to point out that that is the lowest level of expected volatility since 1998...just before Russia defaulted on $40B in bonds, Long Term Capital was twisted by $4B in losses on interest rate trades & 10-yrs screamed higher on safe-haven buying, knocking yields off 1.0%in under 2-months." (Feb 23, 2006)

IOW, traders are not pricing much of a risk premium into the bond markets. Bonds have been trading in a narrow range for so long that everyone yawns. The last time this happened to such an extent it preceded a huge movement in the price of bonds. Last time the move was up..., this time - maybe up, maybe down maybe nothing.

43 posted on 02/23/2006 12:09:44 PM PST by groanup (Shred for Ian)
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To: tmp02
No one wants U.S. debt?

The subtitle you added doesn't add to understanding the point of the news, which rather was expressed here:

"Signs of a tightening labor market had taken an early toll on Treasuries, with jobless claims receding to levels consistent with solid employment growth."

Thus, bond buyers expect stronger DOMESTIC borrowing by the private sector, that is people who borrow money so they can spend it on goods, services, and employees.

So, the bond buyers are holding off locking up their money long-term, expecting interest rates to rise.

If you have savings, you too can buy a Treasury bond. Or, you might prefer to buy the stock of one of the U.S. dollar denominated company that is out borrowing.

Why lose your head with each day's market "fluctuation" (and yes, "fluck you Caucasians too!")? Concentrate on the core of the problem: shrink gov't spending.

Reforming Social Security and Medicare would not just be a good start, it would be most of the deal.
44 posted on 02/23/2006 12:14:11 PM PST by kenavi ("Remember, your fathers sacrificed themselves without need of a messianic complex." Ariel Sharon)
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To: groanup

good information...thanks for that post...


45 posted on 02/23/2006 12:18:19 PM PST by antaresequity (PUSH 1 FOR ENGLISH, PUSH 2 TO BE DEPORTED)
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To: Travis McGee
But its different this time surely our lords and knights at CFR and the trilateral commission will bail us out. /SARC I better go and refi my equity out of my house
46 posted on 02/23/2006 12:34:16 PM PST by vrwc0915 ("Necessity is the plea of every infringement of human freedom. It is the argument of tyrants,)
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To: Travis McGee

Don't you see, they keep the CPI down, hence they keep interest rates down so they do not have to pay higher interest rates on their own debt!!! What would their interest payments be on national debt obligations if the interest rate was 10% or more?

Hmmmm, wonder if my bank would object if I used my own interest rate calculations? "Biff sets prime interest rate at 1% so I will pay you prime plus 1 for a new car loan".


47 posted on 02/23/2006 12:34:25 PM PST by biff
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To: in hoc signo vinces

"Only 10% of our economy produces anything? Where did you get that from?"


Federal numbers. 10% is in manufacturing of good, with an additional 9% producing energy, and the remaining 81% service sector.


48 posted on 02/23/2006 12:43:09 PM PST by CodeToad
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To: Travis McGee

Unfortunately, most people working in the corporate world know little of economics. They see a paycheck and think everything is fine. Few know or understand where that paycheck comes from. I've worked many years in corporate America only to see that few people provide anything to the bottom line. Most people shuffle paper or "manage". When China has the ability to sell and distribute their own goods without us, how many people will have a job remaining?


49 posted on 02/23/2006 12:45:37 PM PST by CodeToad
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To: Toddsterpatriot

"We manufacture more than the GDP of every nation on Earth except Japan.
"

Not true. The GDP of the US includes only 10%, or $1T, in the manufacture of goods. China, alone, matches that.


50 posted on 02/23/2006 12:47:12 PM PST by CodeToad
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To: InterceptPoint

"this inflation business is no joke if you are saving up to retire someday."

Dead right. We are about to see a whole bunch in the baby-boom generation squeel loud as they see their tiny savings eaten up by taxes alone. We pay more in property taxes today than most people paid in mortgage to own their homes in the first place. Case in point is my in-laws. They paid $230/month mortgage when they were paying off their home but now pay $250/month in property taxes.


51 posted on 02/23/2006 12:49:16 PM PST by CodeToad
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To: CodeToad
Not true. The GDP of the US includes only 10%, or $1T, in the manufacture of goods. China, alone, matches that.

I don't suppose you have a source that proves your $1 trillion figure?

Here's mine.

Looks like over $3 trillion.

52 posted on 02/23/2006 12:51:11 PM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: InterceptPoint

"Correct me if I'm wrong but isn't inflation caused by the Fed printing money? "


That and the pesky prime rate they lend on the money they print. For very dollar they print they also get to loan, IIRC, 7 at the prime rate. All three actors, printing money, over lending, and that rate, contribute to the inflationary rate. Ever notice that the prime rate and the rate of inflation are usually about the same?

For every deposit to the federal reserve a bank also gets to loan 10.


53 posted on 02/23/2006 12:51:20 PM PST by CodeToad
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To: RightWhale
hey Right!

entrails my arse,

how about the above mentioned auction, how about the yen carry trade flop, how about M3 going invisible, how about the totally bogus CPI, GDP and employment figures the government is putting out.

When this lands whether it's one month or 10, the absolute $hit is going to hit the fan, wise up instead of wise-off.
Lurking'
54 posted on 02/23/2006 12:53:50 PM PST by LurkingSince'98
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To: CodeToad
That and the pesky prime rate they lend on the money they print. For very dollar they print they also get to loan, IIRC, 7 at the prime rate.

I'm afraid to ask where you got this info.

Ever notice that the prime rate and the rate of inflation are usually about the same?

Not even close. Do you know why it's called the Prime Rate?

55 posted on 02/23/2006 12:53:52 PM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: Toddsterpatriot

"That and the pesky prime rate they lend on the money they print. For very dollar they print they also get to loan, IIRC, 7 at the prime rate. "


"I'm afraid to ask where you got this info. "


Are you saying that isn't true? Lay it one the line, guy, is it or isn't it true the fed loans a ratio against the printed dollar?




56 posted on 02/23/2006 12:56:13 PM PST by CodeToad
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To: Toddsterpatriot

hey Todd!

all you do is ask everyone where they got their info.

You must spend all day watching CNBC. The stuff you are questioning is VERY basic.

Lurking'


57 posted on 02/23/2006 12:58:40 PM PST by LurkingSince'98
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To: Pondman88
Yep, why buy 30-year stuff to get 4.48% when you can get 6-month stuff for 4.70%.

Daily Treasury Yield Curve

58 posted on 02/23/2006 1:01:35 PM PST by jiggyboy (Ten percent of poll respondents are either lying or insane)
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To: LurkingSince'98
all you do is ask everyone where they got their info.

Hmmmmm....why would I ask for a real source? No one on FR ever posts incorrect info.

The stuff you are questioning is VERY basic.

Are you saying you agree with this?

For very dollar they print they also get to loan, IIRC, 7 at the prime rate.

59 posted on 02/23/2006 1:02:34 PM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: Toddsterpatriot
DOOM!

60 posted on 02/23/2006 1:04:40 PM PST by Petronski (I love Cyborg!)
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