Record US Govt 10Y
Tech Abandoned Again!
What will be an ongoing and continuing theme of “Record” US Govt Bond and Note auctions, nobody should be surprised at the pre-rate jump before this year’s quarterly refunding.
For those that haven’t noticed, the US Govt’s refunding totals are basically double of the last decades average and despite the ineptitude of those that fail to grasp the true fallacy of UBI and MMT, sorry money is not magic. Money is utility and that utility comes in the form of compensation for labor, savings or some inherent risk transfer from one willing party to another.
All in all there is a cost, nothing is free, ever! So with that and with all those clamoring for record asset prices, well, there is a major inherent flaw to Quantitative Easing and that is, its a mirage. Its nothing more that an enablement of a fiat/debt created system that allows for negative interest rates and interest rate arbitrage in lieu of traditional organic savings led growth. We have written exhaustively on the Modigliani/Miller Proposition and how the capital structure know is purely focused upon debt.
We here at Magnelibra have been spewing our disdain for such folly for decades and yet, people march in the street claiming racism and inequality, yet the reality is and despite their plight, many don’t understand that its the very system of money that allows for massive wealth inequality and massive asymmetrical Pareto style distribution of money.
Yes we know there is a reason why the top of the pyramid is always detached from the base, we get it, we have always gotten it, we just hope we have enlightened enough to force a cognitive and physical change that must occur should humans want to truly “equalize” things.
Let us be clear, we aren’t believers in equality of outcome (there are those that do and those that don’t), its a fallacy!
Look, we can’t dunk a basketball, we can’t throw 100 mph fastball and we certainly wouldn’t want to try and tackle a 240lbs running back at full speed, but hey that’s ok, it really is.
As rational human’s we understand that each and everyone one of us embodies unique and inherent skill sets, that we are all different and that equality although a great utopian talking point, in the manner by which it is slung today, well, is simply a narrative, something to rile everyone up over.
Anyway we will always revert back to economics for societies ills and the fact that America has poverty, has hungry and unsheltered it truly is a travesty in our mind and the mega billionaires and all their endeavors could certainly do more and should do more.
So back to the US Debt pile refunding and today’s 10Y auction here is the dirt:
US Govt Auctioned $41 Billion 10Y notes priced at a high yield of 0.96%, well above last month’s 0.765% and 11bps higher than March’s high yield of 0.849
Coupon yield will be the 11/15/2030 0.875% Cusip 91282CAV3
Bid to Cover dropped from 2.47 to just 2.32, well below the 2.46 six-auction average
Indirect Bid slumped again, sliding from 62.9% last month to just 54.8%
Directs taking down 13.1%, in line with recent auctions, the Dealer bid jumped to 32.0%, the highest since May 2019 (Yes they will gladly sell right back to FED for a small vig of course)
As for now the bond market is pretty muted with rates higher by just a couple of basis points (Tradingview.com data)
Quick glance over at equities shows Tech once again getting abandoned, well maybe a Trump victory means Anti-Trust laws will come into the purview, we all know a Biden victory (which we doubt) would favor Google and the techs:
The Founding subscribe base will get an update on the GFBP positions tracker which will most likely swap into a short Dow and Long 30Y bond position on the close as equities seem vulnerable to a snap back and probe down and bond refunding will be out of the way! Stay tuned for more.
Magnelibra Capital Advisors the CTA is potentially working on a new digital assets arbitrage strategy to incorporate a physical vs CME futures arbitrage and we will look to bring more details about this in the near future. Many long time readers know that we have always been in favor of anything decentralized in regards to P2P utility and value transfer and we have been watching Bitcoin since its inception. So stay tuned and if any of our followers might be interested in the program we are developing, feel free to reach out.
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-Magnelibra Econemotions
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