The 10 yr auction was mixed but not enough a mover either way to alter market dynamics. The yield of 2.02% was a touch below the when issued but the bid to cover of 3.05 was just under the average over the last 12 months of 3.14. Direct and indirect bidders took a combined amount similar to the Jan auction. If there is a conclusion to draw, its that concerns about global growth are still obvious as why else would there be such demand for 10 yr Treasuries yielding 2%, especially with the implied inflation rate now in the TIPS market at 2.20%, the highest since August. The US economic data has improved but the bond market, in clear contrast to the equity market, seems more focused on Europe, the growth moderation in Asia and uncertain sustainability of US growth in light of another mediocre GDP report for Q4. Also, company comments on Q4 earnings calls didn’t point to robustness in economic activity. That said, stocks are more on the drug high of QE pump priming.
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