Treasury bid-rigging suit filed

A New York law firm — Labaton Sucharow — files class-action suit alleging “insidious treasury auction manipulation.”

The suit alleges a conspiracy by prominent financial institutions, including Goldman Sachs, Citigroup, Credit Suisse, Deutsche Bank, Merrill Lynch, and JPMorgan, among others, to manipulate auctions for US treasury bills, notes, and bonds.

I have told you there was a federal investigation into this collusion to gain the treasury market — just the same as Libor rigging.

Let’s see how this progresses. My first take is that it will not get to the discovery phase, but that may be me being too cynical.

Next Thursday we get our first look at 2Q GDP numbers, estimates have it around +2% growth for the quarter.

This after a negative 0.2% slowdown in 1Q. The government gives three readings as more data arrives and can still change it years afterwards.

But I believe as is usually the case that Wall Street estimates are a bit too rosy. Thursday at 8:30 we will get a sub 1% number.

This will be blamed on strong dollar slowing trade as exports slow. There may be a passing reference to residual effects of the West Coast dock strike and the Bureau of Economic Analysis may make further claims that weakness in the European economy has bled into the US.

Blame anybody or anything on the anemic growth but don’t mention a failed US economic policy or the White House lack of leadership.

We’ll talk more on this next week.


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