Does ZeroHedge understand the Treasury market? According to the most thorough and well known bond market blog—John Jansen’s Across the Curve—Zero Hedge’s reporting “is just egregiously incorrect and demonstrates the collective lack of knowledge of the various authors.”Without a doubt, the rise of the pseudonymous blogging-collective known as Zero Hedge has been one of the great underground stories of online financial journalism. Rising from an unknown blog last spring, Zero Hedge has been regularly cited in mainstream publications such as Barron’s, has inspired investment banks to lash out with rebuttals to its charges and arguably helped focus journalists, lawmakers, and regulators on the issue of high-frequency trading.So the question of Zero Hedge’s understanding of the bond market is important, especially since it has been highly critical of the Federal Reserve. Basically, Zero Hedge has accused the Fed of manipulating markets. Today John Jansen argues that Zero Hedge misread the most recent 10-year Treasury auction. The dispute concerns the “expected stop-out” of the auction, which is highest yield at which market participants expect the Treasuries will sell. Zero Hedge read the most recent auction as blowing out the expectations, coming in at a yield of 3.51% versus an expectation of 3.35%. This would imply that the Fed's attempt to continue a program of quantitative easing would be in trouble.Jansen says the expected stop-out was nowhere near that low. The bonds had not traded that low since Friday, before the labor report which showed joblessness at 26 year highs but new jobless claims falling to the lowest levels all year. The ten year notes were trading much closer to the stop than Zero Hedge reports, Jansen argues.“One must logically conclude that when they make such a fundamental factual error as they did today that they should not be trusted when making grandiose charges about the conduct of monetary policy,” Jansen writes.
Of course, it's always possible that this is just a typographical tempest in a teapot. Maybe Zero Hedge just misread a 3.53% expected stop out as 3.35%.
To embed this post, copy the code below and paste into your website or blog.
It's official: Google rules the world. It's time the company explained what the rules are and how it makes its decisions.
What v-shaped recovery? Economist David Rosenberg says everything is still horrible.
Still believe that crap Obama shoveled about how kids should get a good education? Here's proof that you don't need one to be successful.
Home | About | Contact | Advertise | Newsletter | Companies |* Copyright © 2009 The Business Insider, Inc. All rights reserved. Registration on or use of this site constitutes acceptance of our Terms of Service and Privacy Policy. | Disclaimer
Redesign by Intersect, Inc. | Powered by MongoDB | Hosted by DataPipe
Read Full Article »