10-year auction results

The auction of 10-year Treasury notes went well today, by most measures. The $8 billion in notes were technically sold as part of a re-opening -- they have the same rates and maturity dates as the notes sold back on August 9. The bid-to-cover ratio was a hefty 2.91, well above the average 2.49 for the past 10 auctions. The notes were sold at a yield of 4.81%, slightly lower than forecast.

So buyers are still stepping up to the plate. But I simply cannot get over the nagging feeling that bonds are too rich here. Everyone is in love with 'em. They're massively leveraged long, if you believe the recent CFTC figures. Given the market's penchant for surprising the most people as often as possible, a price decline/rise in rates could be the next big, looming shock. We'll see...