The bulge in tax withholding has ended and so has the brief semi-vacation from huge Treasury supply. That will make conditions a little tougher on the Treasury bulls. Also making it tougher will be the likelihood of a normal cyclical downturn in foreign central bank buying due over the next few weeks.
A recent trend of declining bid/cover ratios at the auctions also suggests possibly waning interest from other major buying sectors, including the primary dealers. That’s no surprise. They’ve had all time record long positions since late December. The boat is loaded and headed for the Italian coast. Under these conditions in the past, primary dealer traders have been known to jump into the sea, leaving women and children on board to die, while the Fed’s traders scream at them, GET BACK ON THE DAMN SHIP YOU MOFOS!
The rocks may not be visible on the charts, but we know that they’re there. This report explains.
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