*U.S. TREASURY SAYS IT PLANS FLOATING RATE NOTE PROGRAM
STORY TO FOLLOW.
Based on LIBOR...........

They really want to do this with rates at their current levels? Can they be this stupid?

Woooooooooooooooooo Hoooooooooooooo! We are SAVED......

From the release:
The Treasury also said it is “in the process of building
the operational capabilities to allow for negative-rate bidding
in Treasury bill auctions, should we make the determination to
allow such bidding in the future.”
The Treasury said that the U.S. debt limit is expected to
be reached at the end of this year, and it expects to use
“extraordinary measures” to fund the government into early
2013.
Raincoats at the ready......

When do the ratings agencies jump in for another round of down grades? Before or after Congress passes the stop gap spending bill?

Quote:

The Treasury said that the U.S. debt limit is expected to
be reached at the end of this year, and it expects to use
“extraordinary measures” to fund the government into early
2013.

I guess Timmy didn't get the memo yesterday.

http://tickerforum.org/akcs-www?post=209....

So the UST wants to base new notes on a floating rate which may go negative, thus they get to capture cash back from the purchaser...

Based upon LIBOR, which is a rigged fraudulent game...

At 220 year 10yr interest rate lows, so that the only way rates can go is up...

Causing huge exposure to the upside for on-budget, Interest Paid, line item expenditures.

Did I miss anything?

Yeah, this...

Quote:

So the UST wants to base new notes on a floating rate which may go negative, thus they get to capture cash back from the purchaser...

Based upon LIBOR, which is a rigged fraudulent game...

At 220 year 10yr interest rate lows, so that the only way rates can go is up...

Causing huge exposure to the upside for on-budget, Interest Paid, line item expenditures.

Did I miss anything?

YES.
-Forced placement of the Treasuries.

This won't be your Granny's Roth IRA.

Question: IF One were to purchase a Negative Interest Rate Bond, wouldn't One be entitled to write off the loss on One's Taxes?

Report to the Secretary of the Treasury from the Treasury Borrowing Advisory Committee [TBAC] of the Securities Industry and Financial Markets Association:

http://www.treasury.gov/press-center/pre....

Partial quote:

Quote:

Against this economic backdrop, the Committee’s first charge was to examine what adjustments to debt issuance, if any, Treasury should make in consideration of its financing needs. The Committee did not feel that any immediate changes to Treasury coupon issuance were necessary. Yet, the evolution of the Fed’s Maturity Extension Programs (MEP) warrants increased issuance to the public sector. We examined this more closely in the second charge.

Separately, the Committee again discussed Treasury’s capability to auction bills at negative yields. The Committee unanimously felt that Treasury should move as quickly as possible towards implementation. We further discussed the prospects for a Floating Rate Note (FRN) program. TBAC was unanimous in its support for the introduction of an FRN program as soon as operationally possible. Members felt confident that there would be strong, broad-based demand for the product. A dialogue ensued about which floating rate index should be used. The Committee gravitated towards referencing treasury general collateral, in lieu of federal funds effective and T-bills. The introduction of GCF futures aided the argument.

The second charge was to examine the impact of the Federal Reserve’s MEP on Treasury’s borrowing needs. The presentation, [attached], highlights how the Federal Reserve’s sales associated with MEP transferred the maturing stock of debt held by the Fed to private investors. Whereas the Fed had, as a matter of practice, reinvested those proceeds in subsequent Treasury auctions, Treasury must now issue that debt to the public to remain cash neutral. For fiscal years 2012-2016, this sums to $667 billion. A discussion followed about the composition of the additional needed issuance. TBAC agreed that maintaining flexibility, given the uncertainty surrounding the fiscal outlook, was critical. Furthermore, the Committee continues to be committed to lengthening the Weighted Average Maturity (WAM) of its debt. Hence, we felt a combination of larger T-bill issuance, FRNs, and a modest increase in coupon issuance was appropriate.

Minutes of the Meeting of the Treasury Borrowing Advisory Committee Of the Securities Industry and Financial Markets Association:

Partial quote:

Quote:

Many members also noted the virtues of floating rate notes (FRNs). The members briefly discussed possible indexes for a Treasury FRN. There was interest in further exploring the Treasury GCF index, especially given the recent launch of the NYSE Liffe’s listed GCF futures.

Can you say "Death Throes"?

"Reissue to the public" and "negative yields."

Oh boy...

You'll just have to flip those Bonds at a quick profit to the FED or a bigger Sucker, Karl !

Hmmm.

I wonder if Ol' Benny Boy would like to stuff the FED Balance Sheet with some Sinking Floaters?

Throxxofvron wrote..

Forced placement of the Treasuries.

At negative rates !

for the chillins' !!!!!11111111

One of many nice posts at FT Alphaville discussing the impact of negative rates
http://ftalphaville.ft.com/blog/2012/07/....

Yep.

The 900lb gorilla is that negative rates trash the money markets and worse, commercial paper markets.

Guess what every major multinational corporation runs on nowdays?

Am I the only one perturbed by the use of the FRN acronym which in my mind means ONLY one thing - Federal Reserve Note? Can't they use FRTN (floating rate treasury note) or something?

We might bear extra scrutiny to the 3-Year auction today--the first auction to be held after the TBAC Report indicating that its members are one step closer to bringing FRNs to realization.

The PDs have been eating 3-Years at the prior two auctions, taking away 59.8% in July and 60.9% in June. (As anticipated, Operation Twist was extended June 20.) These are up from the May (53.1%), April (52.2%), March (56.5%), and January (56.1%) PD takeaways, whereas their February takeaway was higher (63.8%).

To boot, the SHY (iShares Barclays 1 to 3 Year Treasury Bond Fund) lead the WSJ's "Selling on Strength" list yesterday:

http://online.wsj.com/mdc/public/page/2_....

Perhaps not that significant in terms of amount, but, still, a curious move one day prior to the auction.

PDs took away 61.9% in today's auction.

Treasury Release (.pdf):

http://treasurydirect.gov/instit/anncere....

"KD" wrote..

The 900lb gorilla is that negative rates trash the money markets and worse, commercial paper markets.

Guess what every major multinational corporation runs on nowadays?

Uncle Karl, is that Deflationary?