Strong 10-Year Treasury Auction

What generally happens after bond yields rise? At least some investors decide to go chase the yield at a new Treasury note auction and that is what we have just witnessed from the $20 billion 10-Year Treasury Note auction. Bond prices had been down, so of course yields were up, ahead of the auction. The only caveat we would throw out for retail investors here is that this will do nothing to curb the quantitative easing actions we are seeing each week.

The bid to cover ratio was 3.19 and that was the highest in four or five months for the 10-year auction. Foreign investors are measured by indirect bids and they rose to some 47.7% to the highest reading in over a year. Even the direct bid reading of 30% was considered high. Before the auction we had the "on the run" 10-year Treasury at about 2.05% and after that it was 2,029% for the auction.

Today's 10-year auction was ahead of Thursday's key 30-Year long bond auction of $13 billion, which will bring the week's tally to roughly $66 billion.

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