From zero hedge: Doubling Down To (DXY) Zero: Has The Fed, In Its Stealthy Synthetic Bet To Keep Lon

revoldlog

Doubling Down To (DXY) Zero: Has The Fed, In Its Stealthy Synthetic Bet To Keep Long-Term Yields Low, Become The Next AIG?

It seems quite an important news, but can someone please explain how selling treasury put can "pin" the long term interest rate low?

And what is the ramification of this news to the PM market??

InYHWHWeTrust

My brain imploded after the 5th paragraph, sorry. But I saved the article to "My Favorites" being the eternal optimist...

Lemme quote jmski:

"Buy gold. Reload."

jmski52

someone please explain how selling treasury put can "pin" the long term interest rate low?

As long as the Treasury can sell enough long bonds, i.e. - as long as there is a market into which to sell them, the Treasury can keep long bond rates low just by selling more bonds. Since that market has dried up, i.e., nobody wants longterm US debt unless interest rates are allowed to rise - the Fed has stepped into the breach and has been buying Treasuries.

In order to have it look like the Fed isn't printing tons of money in order to buy those Treasuries, they have started selling "put" derivatives at the same time. Selling "puts" makes it look like someone is buying, when they aren't. If someone were actually buying, the prices of the long bonds would go up, and longterm interest rates would go down, or stay low (like they want).

They are "shorting" Treasuries with bogus, highly-leveraged paper just like JPMorgue has been suppressing the price of silver by illicitly shorting the silver market with paper puts on silver that they don't own and never did own.

They use the term "pin" to describe the way they would like you to see it. They are manipulating both the market and your perception of it. There ain't nothing "pinned" to anything.