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Treasury Auction shows weakness:

|Includes: ProShares UltraShort 20+ Year Treasury ETF (TBT), TMV

Today, the US Treasury auctioned off $21 billion in 10yr Treasury notes. Weaker than expected auction results sent US Treasury prices falling and yields rising with the 10yr yield closing at 3.42%, up from 3.38%. The auctions weakness has been attributed to everything from timing of the auction (given that investors are typically hesitant to commit funds and take on risk at the end of the year) to the ever growing size of the US debt auctions (each auction has been growing in size to cover financial commitments made by the US for various bailout and stimulus efforts).


Today's auction was the second of three auctions scheduled this week. In our view, the key auction to watch is the 30yr Treasury auction being held Thursday. We believe that the action in today's auction is only a preview as to what will happen Thursday. A string of weak Treasury auctions adds support to our thesis of declining demand for US Treasuries. Below is a tentative schedule of coming Treasury auctions to keep an eye on.


Disclosure: Long TMV