"It was the weakest bid-to-cover since September 2008, and by my numbers it was the biggest tail since February 1993. It was just a very, very weak result."
The tail indicates that dealers drove an unexpectedly hard bargain to raise yields, and lower prices, to buy the bonds. Ultimately, this could raise interest rates throughout the economy at a faster rate than might be appropriate given the lingering effects of the worst recession in decades.
"If rates unwind higher and too quickly — driven not by the Fed but by the old bond vigilantes — that will be the house of pain for all risk markets," said George Goncalves, head of fixed income rates strategy with Cantor Fitzgerald in New York.
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