Perceived good way and bad way of getting lower rates

Similar to yesterday’s 3 yr note auction, today’s 10 yr auction was just ordinary. The yield was about in line with the when issued and the bid to cover of 3.08 was just slightly below the previous 12 month average of 3.12. Also, dealers took the highest % of the auction since Nov, leaving less in direct and indirect hands. The irony with the action in US Treasuries over the past week with all the hemming and hawing of what, if anything, the Fed will do next with the markets desire of course for more, the bond market has already eased policy somewhat with the drop in market yields. It’s eased for reasons though the market hasn’t liked and that’s after the disappointing US jobs report and what’s going on Europe. The equity market likes to differentiate between what they see as a good way to get lower rates (Fed suppression) with the bad way (slowing growth).

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