The USTreasury auctions continue to proceed successfully, and thus finance the USGovt deficits through bond issuance. The auctions have continued, but their schedule is very frightening since the volume for given days and weeks equals what was once volume for an entire month one year ago. The press networks tell of successful funding for the bonds, even though additional needs are required to keep the stock market afloat. Two deceptions here occur. First, by means of USDollar Swap Facilities, the USDept Treasury is handing money to friendly foreign central banks in order to purchase USTreasurys in hidden or custodial accounts, all indirect bidders. Without them, the auctions would fail miserably. Second, the bid-to-cover ratio is reported in a manner that includes the official primary bond dealers. They, however, are obligated to bid on all auctions. So the 1.92 bid/cover seen last week was an actual failure, since only 92% of bids occurred outside the primary dealers who hustle to unload their inventory. More double counting comes, now that Toronto Dominion and Royal Bank (both of Canada) as well as Nomura (of Japan) join the primary bond dealer ranks. This road leads to staggering hidden monetization of USTreasurys and outright auction failures, BOTH, with severe damage done to the USDollar confidence and reputation.
