Bond Auction Failure Alert

While we have not had an auction failure so far in America, there are signals that we are getting closer to at the very least higher interest rates.  The worst case scenario is a seizure again in credit markets.

The bond market will put up with reckless spending for so long.

At the same time, gold appears ready to make a big move.  I am still buying at this level before it goes beyond my reach.

From Bloomberg:

5-Yr Note Auction

Bid/Cover 2.58
Coupon Rate 1.875%
Total Amount $38 B
Yield Awarded 1.995%

One day good, one day bad. Today's 5-year auction, unlike the strength of yesterday's 2-year auction, went poorly with buyside demand weak. A smaller-than-usual offering size of $38 billion didn't help coverage which came in at 2.58 for one of the lowest levels of the last year. Dealers got stuck with the issue, having to take down 55 percent of the auction for the second highest level of the last year. Treasury yields are moving off lows following the results. The Treasury auctions $30 billion of 7-year notes tomorrow, also a comparatively low offering size.