Following solid 3 yr and 10 yr note auctions, the Treasury stretched it to 30 yrs today and the demand was awful. The yield was a full 10 bps above the when issued and the bid to cover of 2.08 was well below the 12 month average of 2.66 and the weakest since Feb ’09. Also reflecting very weak demand, the Street got stuck with the most since Nov ’08 as direct and indirect demand faltered. There is one thing to respond to the low rate for a very long time policy of the Fed and buy Treasuries but 30 yrs out is asking for a much different thing from investors. Considering the actions of global central banks to what currently ails us, that of a debt noose, lending money for 30 yrs with ZERO inflation protection has been given the thumbs down today.
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