Those who watch the US bond auctions say something is up in the US market. This chart shows the increase in "direct bidders" who took 24% of the last auction (yellow moving average line). Because of the lack of transparency at the Fed, it is not clear who the direct bidders are, but observers think it is a proxy for the Federal Reserve Bank itself, buying bonds so that it can keep a lid on rising 30 year yields. Rising yields would be a disaster for the US government since they would make the interest payments on our hugh debt even more burdensome. Indirect bidders (green moving average line) are the most important category since it indicates demand for US treasury bonds worldwide. This category of bidders usually take 36-40% of bonds offered, but only purchased 28% in this auction.
[chart: investingcontrarian.com]
