Somebody Likes Treasuries

Other than me, anyway. Today’s 10-year auction was a blowout, the Treasury sold $21 billion at a low yield of 2.029% (70.31% allotted at the high), below February’s 2.046% auction yield, and inside the When Issued of 2.053% at 1 PM, indicating massive buyside demand and confirmed by all the internals.

30-year auction tomorrow.

Meantime the insane melt-up in stocks continues. Someone’s gonna get hurt when this one cracks.

Leverage, as measured by NYSE Margin Debt, rose a huge 31.6% year-on-year (YOY) and 10.2% month-over-month (MOM) to $364bn in January, compared to the July 2007 peak of $381bn. Net Free Credits at -$77.2mm (essentially cash balances in margin accounts) have plunged to levels (and at a rate) that BofAML believes generates a sell signal and typically result in market correction. The last time a (2-standard-deviation) sell signal like this was generated was on April 2010 and the S&P 500 subsequently corrected by 16% in two months.

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