Thursday, May 7, 2009

Bond Sale – Bombs Away…

In case you were wondering what caused this in the bond market:

Mike Larson explains the results of our latest 30 year bond auction…
Bond sale bombs

Yikes -- did you see that intraday chart on the long bond futures? Nasty! The government just sold $14 billion of long bonds at a whopping 4.288% yield. That was far above pre-auction forecasts for a yield of 4.192%, according to Bloomberg. The bid-to-cover ratio came in at just 2.14, compared with a 10-auction average of 2.24 and a last auction showing of 2.4. Only 33% of the bonds sold to indirect bidders. That was above the 26.1% average of the last 10 auctions, but well below the 46.2% reading at the last auction. At last check, LB futures were off 1 29/32 after trading weak earlier in the session. Ten-year yields are shooting up 11 basis points to 3.3%.

Frankly, it’s good to see some bond vigilantism. It is sorely need to cap the shenanigans at the Fed and Treasury who are simply OUT OF CONTROL.

In case you didn’t catch how out of control, here’s the video of the Fed’s IG explaining “clearly” how she does (or doesn’t do) her job:

Is Anyone Minding the Store at the Federal Reserve?

Those who think that spike down in bonds (rates UP) are not related, you best think again.

BTW, here's a link to the bond market article I wrote back in January. Other people are just now writing about what I wrote then: Bond Market Hide & Seek – A Domed House & 3 Peaks...