Chillin' out till it needs to be funded
It might sound a little uncharitable to economists and the team at zerohedge.com, but the book of revelation probably does not call for an apocalypse, we have called for, in the search for “what will happen” in 2012 Esp that i am in no position to assume that my charted optimism has a better chance out there but just that the low bid cover ratios in the 10 yr and 30 yr auctions where the Fed bought more than 60% of the issue thru Primary Dealer repors, is just a sign of fatigue from institutions that have much less dry ammo than they would normally have and a slow wait and watch will keep growth on and risk on flying thru 2012. In fact it’s probbably a case of one auction too many in most economies, in the US calendar this will fit right in with , start small we have to last the mile, our banking at the Fed’s done anyway.
Perhaps, theirs’ was just to reason why and then hope. Because not only must we hope, we have every reason to believe that given the first two weeks th at Europe itself is no longer bothered about its economic delicateness instead of the legacy that was to be Euro’s next 10 years, and that the Economies are fine, the Euro will not shut down and the likely US recession will not really clip the growth from its new 3% peg. Unfortunately llike the Euro has a chance to fade away that is a finite 1-2% probability, so we have a 1-2% probability because of this US Treasury auction that US may not track growth.
However i stil think, with Europe left to its own ways, US has a finite chance of ending with 3% growth and Bid Cover Ratios should be read and analysed only to say it was satisfactory at 3.29 or 2.60, in the latter half of the year again, once we have what stock to roll over ( like a lot of Bank purchase of Treasuries already fattening the Fed balance sheet) we will have rising bid to cover ratios and close with the high of the year. Also, the $1.2 tln debt ceiling comes for a vote Wednesday and will be passed by veto in the worst.
The lowering yields in US Treasuries actually have become a fact of life for the US Economy till it scores a good rebound quarter, what you can manufacture from a Chinese style buffet of all you can make , all you can sell with a solid jobs programme and infra building good cornerstones, which have been left to lie in the election year
Spain and Italy , even Germany have quite a debt program coming and it is unlikely Germany will come to a recession as also that Italy and Spain will have trouble in February. Greece would be a ugly transfer though, as the enforcement of any bailout package is out of the question and Greec ewill manage on its own, having already rejected for itself the option of “Drachmatization”