Today's UST Auction

These Treasury auctions just keep getting stranger by the day. Today $21 billion (another $21 billion above and beyond the debt ceiling) in 10 year bonds were offered and scooped up. Each auction seems to be setting some kind of new record and today's was no exception, the 10 years were placed at a record low yield of 1.90%. The bid to cover was a healthy 3.29 which is in the top 5 highest BTC in the history of the 10 year. Obviously something is going on here. This doesn't seem to be the same safe haven buying we've sen in the shorter duration notes, but it is some kind of flight to safety as the US seems to be viewed as a safe place to park a lot of cash for a return that is really, well... meager. And what about the fact that these are being sold above the debt ceiling? No one seems to mind.

In a reversal from yesterday's auction, direct bidders came in much stronger at 17.4% which is about 2x more then the last 10 year auction. The PD's took about 44% and the indirects are still weak, which is not surprising as they have their own debt issuance to worry about, whether it be China or Europe, they came in at a low 38%.

So that's about $50 billion raised in the last 2 days which is above the debt ceiling, thus yesterday when I ran the "Breaking News" caption from CNBC about the F_E_D remitting nearly $77 billion in F_E_D 2011 earnings (remember this is a quasi governmental-private corporation that is FOR PROFIT) back to the Treasury, this is why. When they run out of flow from the F_E_D, they'll do the same as last time we breached the ceiling and start burning government pension cash.

In any case, its time to take a closer look at Treasuries