2 Year Treasury notes sell at 0.802 yields (lowest ever!) Demand was high (2yr auction bid to cover at 3.16), but there was not a massive buy up of 2y Treasuries. But why would there be? You have a declining US dollar (o% interest) and a surging stock market that is giving better returns (within tight trading ranges). With Treasures yields as low as they are and interest paying almost non existent, current market buying was due to squaring off funds into goverment debt prior to year end; on the premise that the market (equities) are currently overstretched and a pending correction is due. But as I mentioned in this post Dow breaks psychological 10,000 resistance - trading ranges reset the only thing that will correct the markets is something major. This could actually be the bond markets at some point. In the meantime markets will continue to rally, the US dollar will sink, gold and commodities will stay inclined.
In summary the bond market expects the US goverment and Federal Reserve to continue to support asset prices and keep interest rates low. So the speculation will continue in the stock market as stock prices will inflate with poor fundamentals attached.
Completely distorted markets.
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