treasury now issuing "floating rate treasuries" (OMG!)

[Large Sarge]

http://www.zerohedge.com/news/2013-05-01/treasury-issues-draft-floating-rate-note-term-sheet

this might be a first? do not recall this ever being done before....

As we reported well over a year ago coupled with some subsequent thoughts on what the inevitable launch of floating rate notes (FRNs) by the US Treasury means for the US bond market, we now learn that the launch of FRN Treasurys is imminent and the first US FRN note may come to the public as soon as a few months from now. As the Treasury's refunding statement issued moments ago announced, "we plan to issue a final rule on floating rate notes in the coming months, with the first FRN auction estimated to occur in either Q4 2013 or Q1 2014. This timeframe reflects Treasury's best estimate for implementing required auction regulations and IT systems modifications. Treasury will provide additional information regarding the timing of the first auction at the August refunding."

Treasury adds: "Treasury has reviewed the comment letters that were received in response to the Advance Notice of Proposed Rulemaking (ANPR) published on December 5, 2012. We have decided to use the weekly High Rate of 13-week Treasury bill auctions, which was described in the ANPR, as the index for Treasury FRNs."

So much for Libor.

Below is the full sample term sheet provided by the Treasury on what to expect quite shortly out of Jack Lew's department:

[mamboni]

General Ackbar would never buy these.

http://i234.photobucket.com/albums/ee137/Plvzdxmy/ACKBAR.png

[Large Sarge]

they really must be desperate, this has to be an attempt to restore confidence in the bond markets......

everyone knows rates must rise, and they will be left holding the bag....

and inflation is killing their current investments....


"floating rate bonds"

desperation me thinks

[Horn]

This might be it fellas, get ready for all those dollars to mysteriously find their way home.

[mamboni]

they really must be desperate, this has to be an attempt to restore confidence in the bond markets......

everyone knows rates must rise, and they will be left holding the bag....

and inflation is killing their current investments....


"floating rate bonds"

desperation me thinks

Floating rate bonds.....just ponder that one for a minute. It really inspires confidence in the rock solid stability of the monetary system, don't it?! /sarc

The FED has destroyed capital: principle has uncertain value and is insecure (can you say bail-ins) and getting yield today is akin to chasing rainbows. The free market is literally crumbling all around us. The only real stores of value are gold and silver in hand. I'm beginning to think the dollar price of the metals is all but meaningless and very soon gold will not be for sale at any price.

[messianicdruid]

"Likewise, David said, "Let their bountiful table become a snare, a trap that makes them think all is well. Let their blessings cause them to stumble, and let them get what they deserve."

[Horn]

I guess floating means it can to go into the negatives now.

[JohnQPublic]

I guess floating means it can to go into the negatives now.

I think that would be sinking rate bonds (or falling maybe).

[mamboni]

The Treasury offers us plebs floating rate bonds! Wowzer! In other news, the Chinese continue to clean out the west's gold reserves:


Data for the Shanghai Gold Exchange physical delivery statistics (compare these numbers to the Comex):

http://www.goldminerpulse.com/v/shanghaiGoldExchangePhysicalDelivery.php
(http://www.goldminerpulse.com/v/shanghaiGoldExchangePhysicalDelivery.php)


Peak One Day Delivery: 35.7 tons of gold, 22 March 2013.
Current Month Delivery: 208.6 tons of gold as of 26 April 2013.
Peak One Month Delivery: 328 tons of gold, March 2013.
Gold Delivery Since 1 January 2013: Gold delivery (year to date): 1030 tons.

[JohnQPublic]

Gold Delivery Since 1 January 2013: Gold delivery (year to date): 1030 tons.



That is 1/8 of US reserves!

[mamboni]

That is 1/8 of US reserves!

What reserves? You're an optimist.

[JohnQPublic]

What reserves? You're an optimist.

Correction: That is 1/8 of US stated reserves!

[Twisted Titan]

Wait a minute Im still trying to wrap my head around exactly what they are now offering

I know what Fixed Rate bonds are

I know what T.I.P.S. are attached to the Phony CPI

So "Floaters" are rates that can bounce around???

Who determines the value?
How long do you have to hold them for??
Can floaters go in to negative territory??
Who the hell is going to buy them???


I got a million questions but im too busy clenching my Three Mercury Dimes.

[Sparky]

Those who have claimed that the Fed and the Treasury have used up all the tools in their toolkit have once again underestimated how long this monetary game can be prolonged.

Floating-rate bonds seem like a paradox. I wonder what this will do to the stability of the bond market. In the short run, it will boost the demand for bonds, which is the motivation for issuing them in the first place. But this seems ripe for "unintended consequences".

[mamboni]

First photo is of 2.4 ton gold pallet, 192 good delivery bars, each ~400 oz. Second photo is of ~1000 tons of gold, what China imported in just the last 4 months.

4844
http://gold-silver.us/forum/attachment.php?attachmentid=4845&d=1367429313

[Large Sarge]

I think this the end of the line for the bond market, remember a week ago or so Michael pento went on CNBC and said the bond market was over, the bubble was ready to burst, well here is the proof.....

remember in late 2004, you only had to have a pulse to get a mortgage, and everyone and their brother was selling real estate....

this is the same phenom only in the bond market, so ludicrous, but accepted widely by the masses

[Serpo]

so they do floating rates on sinking bonds.