Zero Hedge and the Ten Year Result

September 9th, 2009 2:26 pm | by John Jansen |

The Zero Hedge blog consumes much time and effort on the topic of the Federal Reserve and monetization of the debt. I have involved myself in several high level fracases with the folks who run that blog.

I had promised myself that I would not be controversial again regarding that site and would accept some of the good stuff which they write and excuse the bad.

The blog’s coverage of the 10 year note auction is just egregiously incorrect and demonstrates the collective lack of knowledge of the various authors on the daily ebb and flow of the bond market. Here is a line from that blog’s story on the result of the 10 year auction.

“Yields 3.510% vs. Exp. 3.350%, 16 bps miss in final High vs. Exp.”

John Jansen writing again. The author noted that the 3.51 percent stop was 16 basis point higher than the 3.35 expected result. The story’s headline notes an expected stop of 3.35 percent. When I first read that headline I excused it as a simple transposition of 3.53 and 3.35.

I am a typographical disaster and hesitate to seriously criticize anyone for that error. However, when you refer above to the first line I cut and pasted here which states ” 16 basis point miss in final High vs Exp” you realize that this was not a typographical error and that it exposes the author’s ignorance and inexperience on the topic.

The author would have known before he/ she composed that line that the WI 10 year note has traded all day in the upper 3.40s and low 3.50s and had not traded in the 3.30s since Friday morning before the labor report.

That blog has made wild charges regarding the Federal Reserve System. I believe that the authors know very little about the Federal Reserve or the moment to moment iterations of the Treasury market.

If they did it would have been impossible to make such an outrageous conclusion about the auction.

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.

The comments of the bloggers at that site look and feel authoritative. They write well and and present themselves on a glossy site. The only problem is that in this instance they have demonstrated a fundamental lack of experience, expertise, and erudition on a topic in which they claim to possess all of those traits.

I am sorry to spend so much time on this but I think it is important to address the issue.

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  1. 29 Responses to “Zero Hedge and the Ten Year Result”

  2. By pb_2_au on Sep 9, 2009 | Reply

    Thanks for this blog… I check it regularly to keep my head on straight in these crazy markets. With all the information swirling around it’s nice to have a professional with experience to reference w.r.t. bonds which can be the most confusing and important piece of the puzzle.

    ZH is OK but seems like they’re serving poisoned bear food most of the time. I think they’re more quant savvy and should probably stay away from the bond and monetary commentary.

  3. By Jacopo on Sep 9, 2009 | Reply

    All posts coming from ZH have to be taken with a grain of salt since everything is biased / flavored with their opinion.
    This is acceptable because they make it very clear.
    In this case the author just overshot, interpreting misread data as to fit their view of the world (namely that the modern world is going to fall apart any minute now).
    That style is very amateur and hopefully it will make them reconsider their approach and present their posts in a more balanced fashion.

    Outside of this ZH is a timely, provocative and enyoable read that contributes well to my information portfolio.

  4. By anon on Sep 9, 2009 | Reply

    an invaluable public service announcement

  5. By Bman on Sep 9, 2009 | Reply

    yes, and wouldn’t one look at the market and find it curious that 10’s were dramatically unchanged given a 16 bp tail before posting it? Obviously they did not – just wanted to rush-out the “news”.

  6. By Al on Sep 9, 2009 | Reply

    you are a harsh critic, John. )

    but, what do you think about Bernanke the genius, when he said that max losses for subprime will be in the $50 billion vicinity, while almost everyone in the business wondering is he an idiot?

  7. By Bob on Sep 9, 2009 | Reply

    Uhhg, would you please stop with the ZH talk already? Someone’s wrong on the internet again. They’re everywhere!

    I go out of my way to avoid wasting time reading anything from ZH and now you are bringing it to me every few days.

    Please, ignore the pervasive existentialist fantasies in the blogosphere and just feed us the substance of reality as it pertains to the bond market.

  8. By JR on Sep 9, 2009 | Reply

    Envy and jealous are unbecoming. Content drives readership.

    Clearly its not a typo. )

  9. By Pietro_F on Sep 9, 2009 | Reply

    I’d say this qualifies as great content. Glad I have both Across the Curve and ZH in my RSS reader…kind of like an informal system of checks and balances. Thanks for the clarification and I’m checking to see whether anyone’s linked this on ZH.

  10. By Tyler Durden on Sep 9, 2009 | Reply

    Hi John, I appreciate the post. I suggest you bring your grievance with the folks at Ran Squawk where the data was sourced:

  11. By John Jansen on Sep 9, 2009 | Reply


    With all due respect I think that if you are pontificating authoritatively on a topic you should be able to spot an error as outrageous as that one.

    I know alot about a narrow topic and stay well within my bounds. I do not venture very far from home base.

    Once again I respectfully suggest that you and your cohort should do the same.

    All the best.



  12. By SP on Sep 9, 2009 | Reply

    Heh. Fracases? My Shorter OED didn’t help me, and wiktionary tells me the plural can be either fracases or fracas. Being English I had never heard it (or read it) before. I learn something new here just about every day. Carry on chaps.

  13. By Tyler Durden on Sep 9, 2009 | Reply

    Duly noted, we encourage your constant error proofing on Zero Hedge as it is to the benefit of both sets of readers. We will do the same.

  14. By bryce on Sep 9, 2009 | Reply


    Great work. I’m an avid reader of both blogs, and I think it would be a shame to dispense of commentary from either group.

  15. By Joeb on Sep 9, 2009 | Reply

    A crushing blow delivered by the ominous JJ on the naive ZH. However, unfamiliarity with something is not always bad. sometimes its outsiders who are able to detect seismic shifts. This is because when you’re too close, you often over-focus on the finer ups and downs, rather than the bigger picture, which must be approached from a distance.

  16. By Aubond on Sep 9, 2009 | Reply

    I reproved you for your last spat. So I owe you Kudos for this one. Well deserved, I can’t imagine a scenario in which ones makes that mistake except for a glaring lack of understanding and awareness. I didn’t even have to check a screen to know I hadn’t missed something – was impossible. Regards

  17. By Lil on Sep 9, 2009 | Reply


    I am really embarrassed on your behalf, (and for any drama queen making a big deal about this).

    Ironically, your rant about a minor issue makes a bad reflection on your professionalism, not ZH. ZH has been talking about these issues for ages yet somehow, this is the first time you have “stumbled across” such alleged “ignorance”, even though you have a link on their website!! I mean are you for real? If you are so flabbergastedm then REMOVE your link of their cite, hypocrite.

    Okay, so are you REALLY that disingenous, or just looking for a way to improve traffic to your blog b/c ZH is hot and you’re um, well, not?

    Obviously its the latter.

    Quit the drama. I have only come here to post this and let you know you LOST ME as a reader for being such a jerk.

  18. By bond noob on Sep 9, 2009 | Reply

    I cant believe people are comparing JJ’s blog to ZH. The quality and wisdom here on here by far exceeds ZH. By far! (If I said “by far” again, would that constitute as one too many “by far”s?)

  19. By anonymous on Sep 9, 2009 | Reply

    pb_2_au: “I think they’re more quant savvy and should probably stay away from the bond and monetary commentary.”

    I’m a quant guy who thought they were more bond savvy and should probably stay away from the quant commentary.

    Maybe ZH is a freshman finance student?

  20. By j on Sep 9, 2009 | Reply

    I guess they decided not to look at their BB terminal, considering all of the charts they have from them, they chose to ignored the news from bloomberg. Odd…

  21. By JL on Sep 9, 2009 | Reply

    Saw the same error on RAN, they may have picked up a BB typo or done one of their own. Nonetheless, 16bps beggars belief.

  22. By anon on Sep 9, 2009 | Reply

    pb_2_au: “I think they’re more quant savvy and should probably stay away from the bond and monetary commentary.”

    I’m a quant guy who thought they were more bond savvy and should probably stay away from the quant commentary.

    Maybe ZH is a freshman finance student?

  23. By Kyle on Sep 9, 2009 | Reply

    John, please ignore Lil’s comment. That is all, thanks.

  24. By franko on Sep 9, 2009 | Reply

    great work mr jansen – however, when the usd govt bond market cracks bigtime (sometime in the next decade, i’ll warrant) 16bps will be chumpchange – but also, it won’t be just one bond on the curve either, it’ll be the whole shebang

    jj keep up your outstanding work – i forward ur link at least once per week


  25. By Dr.Dan on Sep 9, 2009 | Reply

    As always, Great work, JJJ.

    Your integrity is great and I bow to that.

  26. By Griff on Sep 9, 2009 | Reply

    As an ex-member of the FI industry hoping to rejoin in the near future, this site is invaluable for the posts / comments. Thanks all around.

    Oh yeah…a few “huzzahs” never hurt.
    “By far! (If I said “by far” again, would that constitute as one too many “by far”s?)”

  27. By cars on Sep 10, 2009 | Reply

    Thanks John. I was very busy yesterday but noticed the ZH article. My first reaction was, this must be a typo, but then, “Tyler” didn’t even notice that it must have been a typo and went on with his usual rant. Great entertainment value over there. And I get a sense that the peanut gallery at ZH is no better, as they just crossed the water to come over here to insult you (Lil).

    Again, you are the first financial blog I read every morning. Keep it up!

  28. By Peripatetic1618 on Sep 11, 2009 | Reply

    Correct information makes money. I will be sure to visit this site more often. Thanks.

  29. By Arn on Sep 28, 2009 | Reply

    A little story on the folks behind zero hedge if anyone’s interested:

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