The selling just keeps on washing over the long-term bond market. After a brief bounce in the wake of the 2-year note sale earlier this afternoon, bonds rolled over. Futures are now down 25/32 at 118 17/32. The yield on the 10-year Note has risen another 5 basis points to 3.5%. The dollar is still up on the day, but barely. An earlier rally to 80.78 on the Dollar Index has mostly evaporated, with DXY up just 8 bps to 80.1 at last check.
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I just read something about a graph called the Monthly Mortgage Rate Resets from Credit Suisse. It forcasts the amount of mortgage resets that should occur in the next 3 years. Are you familiar with it? or have seen it? If so, what is your opinion of it?
I don’t quite understand all this. Do these auctions represent US debt that the goverment has already spent? Like for the bank bail-outs and economic recovery package, is that money already spent and now the gov is trying to raise the money at these auctions to finance it? Except that the interest to be paid is detemined by the auction process? So the money has been spent but the cost is determined in the free market auctions? So if the demand is low the costs go up?