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Despite offering some of the highest yields in recent memory, Uncle Sam is having a tougher and tougher time selling bonds right now. Demand at yesterday’s 10-year auction was abysmal, which tells me there’s not much appetite for that particular flavor of Treasury debt. Today’s 30-year Treasury auction was… “average” if you’re being charitable - or you believe what you see in the mainstream financial media.

I’d call it a miss, though. The bid-to-cover (the amount of bonds offered for sale divided by the total dollar amount of bids) was weak at 2.37, and lower than the last 30-year auction. We can talk about the implications of a government beginning to struggle to secure creditors despite high yields - but that’s a whole ‘nother can of worms.

Either way, in the here and now, investors are clearly not feeling great about the odds of a Fed rate cut this summer. But after the auction something downright weird happened. After an auction like this, you’d expect stocks and bonds to sink and yields to spike… but what we got was a bounce in bonds and a spike in equities. Let’s unpack that - it’s significant…

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