The 30 yr bond auction was soft as the yield was 1 bp above the when issued and the bid to cover of 2.47 was below the previous 12 month average of 2.68. Also, Direct and Indirect bidders took the 2nd least amount since Aug, leaving the rest to dealers. Bottom line, with another QE keg being brought today to the liquidity party, courtesy of the BoE and reminding me of, http://idiotflashback.files.wordpress.com/2009/12/belushi_in_animal_house-13.jpg, inflation expectations have been rising and the action in the 30 yr bond will reflect the most sensitivity to that. While statistically right now inflation seems benign to some, inflation in the quantity of money currently outstanding is unprecedented.
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