The bid to cover came in below the average at 2.62 which incidentally was the worst bid to cover since Q1 2010 when QE1 was wrapping up. Indirect bidders (Foreign Central Banks mostly) came in low at 32%, the worst indirect participation since March of 2009. The auction was described as "atrocious"!
Yesterday I mentioned the situation in treasuries in this post. It may be worth a quick re-read when you have time. Some of the long plays I mentioned yesterday to take advantage of this obvious change in sentiment included the following...
All are at a gain today, 3 of 4 are posting higher volume and 3 of 4 are optionable.
It looks like a change in sentiment is underway.
As yields rise, we have to consider the consequences of Carry trades being shut down, such as the Dollar/Yen Carry trade. Should the carry trade be unwound, it should push the dollar higher and that of course typically has an inverse relationship with most asset classes.
The thing to take away from this if anything, is the change in sentiment and what it will mean for the market going forward and of course, how we can best position ourselves to take advantage of it.
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