The New Face of Losses

Yesterday, buried on the back page of the B Section of the WSJ, there was a big dose of graphic eye candy under the heading : The New Face of Treasury Auctions. I highly suggest you give a lookie-loo.

Under the rose colored analysis - "Today, domestic bondholders account for greater than half of the more than $14T in marketable debt outstanding." Less than 15% of T purchases were by foreign investors, down from nearly 43% ! Yay Baby Boomers amiright? Um, NO.

For the 25 years prior to 2009, when the US citizen was less than interested in bonds and bond funds, real yields were higher and inflation was in the strong phase of a 30 year decline. The Street is less involved in Uncle Sam's IOUs than any time since modern financial deregulation. Secured lending is replacing LIBOR wholesale funding as trillions of notional  back month Gyros slowly melt off the expiry. All Bond desks to Janus.

As we have stated on this blog many times before, a seminal moment in markets is a page turn in a history book but years when unfolding. Deemed "Certificates of Confiscation" in the 80's at 5+% real yield and coveted by the public now, Bonds remain our favorite disdain. The WSJ may think its swell that John and Jane Boomer are plowing more money than ever into bond funds but we see it as the necessary action of the end.

Remember the Bond Trader's mantra : There are no bad bonds, just bad bond buyers.

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