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Two Ways: Treasury Fire Sale All Fire, No Sale


Strengthen your portfolio in good times and bad.


Stocks tumbled after a $34 billion, 5-year Treasury note auction went sour. According to Bloomberg, the sale drew a higher-than-expected yield, igniting concerns about the US flooding the market with debt.

Traders were already worried this morning because the 40-year UK gilt auction failed for the first time in over 7 years. "This is despite central banks in both countries purchasing and planning to purchase massive amounts of government debt," said Minyanville Professor Tom Fant.

The yield on the five-year note drew 1.849%, higher than most expected. The Wall Street Journal reports that indirect bidders bought just 30% of the monthly auction, the lowest since December. The indirect bid, which measures demand from foreign and domestic institutions (foreign central banks included), is a closely-watched gauge.

Tomorrow the Treasury is scheduled to have another $24 billion auction of 7-year securities. This after selling $40 billion worth of 2-year notes just yesterday.

See Professor Kevin Depew's Five Things: United States of Adequateness.

From the Bull Pen: Weaker dollar, higher commodity prices? Is it time for the Natural Gas ETF (UNG) to play catchup? See the stock close to capturing its 50-day moving average. Bulls can place a sell stop below $17.

From the Bear Cave: For those that expect the dollar's slide to continue, one option may be the Currency Shares Euro ETF (FXE). A sell stop can be set below today's low, near $134.50.

We're almost there. Have a great night and see you in the morning.

In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to affect positve change in the lives of children.

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No positions in stocks mentioned.

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