US Treasury

Just one day after international sanctions against Iran were lifted, the United States has imposed fresh sanctions on Iranian companies and individuals over a recent ballistic missile test. U.S. officials said that the Treasury planned to announce the penalties in late December, but held off after the Iranian foreign minister said they could have derailed the prisoner exchange that took place over weekend. The BBC reports: The new sanctions prevent 11 entities and individuals linked to the missile programme from using the US banking system.

If anyone had expected that today's record AB InBev deal would lead to a tail in the just concluded $21 billion 10-Year (technically 9 Year-10 month CUSIP M56 reopening) auction, they would be very disappointed, when moments ago the US Treasury announced a high yield of 2.09%, stopping a whopping 1.5 bps through the When Issued 2.105%, and the lowest yield since October's 2.07%.

The Bid to Cover of 2.77 also rebounded solidly from both last month's 2.64 and the TTM average of 2.63, and was in fact the highest since December 2014.

Something surprising emerged in the latest Daily Treasury Statement report showing the sources and uses of operating cash of the US Treasury: the line item for Federal Reserve Earnings exploded to $19.3 billion on December 28, doubling the amount of cash the Fed had remitted to the Treasury for all of 2015.

This record, unprecedented one-day payment is shown in the chart below:

And just like that the Fed, also known as the printer of US currency, gave the Treasury a one time record bonus of $19 billion.

If at first you don't succeed, try, try, keep trying again and again.

That appears to be the mantra of Goldman's credit strategists, who one year ago when the 10Y was trading right around current levels, predicted that the yield on the benchmark bond would rise to 3% by the end of 2015. It was just a little off.

First, here is Goldman's apology for being so wrong in what may be the most important forecast a bank makes (as it involves everything from the economy to the equity risk premium): where the 10 Year will trade:

After several months of significant reserves liquidations by China (specifically by its Euroclear proxy "Belgium") which tracked the drop in China's reserves practically tick for tick, in October Chinese+Belgian holdings were virtually unchanged according to the latest TIC data, as China moderated its defense of its sliding currency. Of course, putting this in context still shows a China which has sold $600 billion of US paper since 2014, as this website was first to note over half a year ago.