David White

Treasury sells $40B in three-year notes at 1.404% (.pdf). Bid-to-cover ratio of 3.33 vs. a recent 2.82; indirect bidders take 68.5% vs. a recent 55%. Big jump in direct bids to 7.5% vs. recent 5.9%. Ten-year Treasurys moved slightly higher; the 30-year yield is -0.01 to 4.39%; 10-year -0.02 to 3.48%; 5-year -0.01 to 2.29%; 2-year +0.01 to 0.85%.

This just shows the growing uneasiness of investors with the current market rally. Bonds are a safe haven. The market rally today seems based partly on the belief that Ida would do significant damage to gulf infrastructure. Now that Ida has been downgraded to a tropical storm, that seems unlikely. Stocks may have gone up on a false premise. A fall tomorrow (or even later today) could start a big sell off. When thinking about this, one shold also take into account that the government figures for GDP and productivity are likely overstate (CNBC article today) due to inefficient data gathering techniques (for example, carburetors made in China are being counted as made in the US).

USD Index has been edging upward. it is now down only -1.00%. As damage to the oil facilities in the gulf does not occur, it should recover significantly.