< HOME  Tuesday, January 17, 2006

First-World BONDS at Bargain-Basement Prices

The Treasury plans to borrow $171 billion between January and March to pay for rebuilding after Hurricanes Katrina, Rita and Wilma, $27 billion more than in last year's first quarter.
Coupled with the recent news about the US hitting its debt ceiling this March and raising it yet again, the stage is set for bond buyers to clean house, while taxpayers get stuck footing the interest bill.
The Treasury's auction of $13 billion of five-year notes on Jan. 11 drew the least demand since April.

Companies added to the strain with a record $37.9 billion of bond sales last week.

"I don't want to get overly bearish," Ted Ake, co-head of U.S. Treasury trading at Mizuho Securities USA Inc. in New York, said Jan. 12. "But we're getting a ton of supply, and not just Treasuries."
According to the laws of supply and demand, when there are too many prostitutes on a corner, each prostitute has to do more tricks for every dollar.

The BOND market is no different. You're welcome to comparison shop; the US will beat any country on the planet, guaranteed - or your money back!
"We are at a tipping point now where people may decide yields should go higher and more supply may increase the chances of that."

Yields are too low given interest-rate futures show traders expect the Federal Reserve to raise interest rates by a quarter of a percentage point at its next two meetings
They pay LESS to exploit us MORE. Is your blood boiling, yet?
"Traders normally try to use the supply story to push rates higher," George Goncalves, a fixed-income strategist in New York at Banc of America...[one of] the 22 primary dealers of U.S. government securities that are obligated to bid at the Treasury's debt auctions.
Obligated?!! Poor Boa! Just doing its duty under the law.

And this is just the beginning.
Companies may increase the supply of debt. Banc of America strategists said corporate bond sales may reach $90 billion this month, the most since May 2001, as borrowers rush to sell ahead of the Treasury and before the Federal Reserve meets.

The success of coming auctions depends on demand from foreign investors, who hold about 52 percent of U.S. government debt, said J&W Seligman's Mahony, who is "inclined to be a buyer" of Treasuries.
I bet! Who could resist such a sweet deal?

And please, tell me, when is a bond auction ever 'successful' for American citizens?
Indirect bidders, which include foreign central banks, bought 28.5 percent of last week's five-year note auction, down from 44 percent in December.
44%!!! Slaves, meet your masters.

And that's not all, folks. Not only do they get all the money, they get all the guarantees.
The [Treasury's] bid-to-cover ratio, a measure of demand, [which averaged $2.5] for the past 12 auctions, posted [its] biggest two-day slide in a month after the government received $2.10 of bids for every $1 sold of the five-year notes.

"The results are mediocre at best," Rick Klingman, head of U.S. Treasury trading at primary dealer ABN Amro Inc. in New York, said after the auction. "Given the amount of corporate supply coming and the refunding announcement around the corner, it's not a good sign."

Refunding announcement? Look beyond the rhetoric, people. This is NOT 'free-market' capitalism.

This is controlled VULTURE capitalism. We are captive audiences being bled by our own governments.


At Tuesday, January 17, 2006, Blogger cyclone said...


Great post, as usual. When China pulls the plug, it's over. No?


At Tuesday, January 17, 2006, Blogger qrswave said...

It doesn't have to be over, if people on both sides of the ocean understand the TRUTH of what (and who) got us into this position, and how we can begin to rebuild a principled future for all concerned - including bondholders.

At Tuesday, January 17, 2006, Blogger DigitalSpy said...

you are definitely one of those glass half full type guys :)

At Tuesday, January 17, 2006, Anonymous Anonymous said...

Article discussing the ramifications of the Iranian Oil Bourse, scheduled to open on 23rd March 2006.

At Tuesday, January 17, 2006, Blogger qrswave said...

digital spy, thanks for stopping by!

I try to keep a positive outlook.

It helps me get out of bed in the morning..;)

Things are going to hell in a hand basket, I know. But, there truly are solutions - if people earnestly want to solve our problems.

The trick is, how do we get those people into power, and the other ones out?

It'll take a hell of lot of educating the average Joe. But, I believe if we reach critical mass, in awareness, things can turn around.

Besides, what other choice do we have? Live like slaves and watch our countries and our children's futures get robbed and destroyed? I can't do it.

I've got one life to live. I need to make it count.

BTW, I blogrolled you!

Anonymous, thanks for the link!

At Tuesday, January 17, 2006, Blogger DigitalSpy said...

You are going to have to reach those Average Joe's awfully quick. I have reached the point were I think it is too late to do much about it. The people of the US seem to be waking up but it's too little too late because waiting in the wings you have the "new freedom initiative" which will make sure that dissenters are medicated for their dissent. If that sounds a little bit tinfoil hat then I can't help it.
here is some light reading (although I suspect you are already aware of the depth, scope, and ramifications of the NFI and TMAP). http://tinyurl.com/dyzxb

At Wednesday, January 18, 2006, Blogger efsaturn said...

great link to article on energy bulleting.

The whole T bonds is very confusing to me for some reason. Any recommendations on getting the basics of the bond market?


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