Was That The Treasury Bubble Death Star?

Courtesy of Lee Adler of the Wall Street Examiner

This report covers Treasury auctions, federal revenues, and the outlook for Treasury supply, Treasury yields, and the dollar. Here is a sampling of the 11 key bullet points in this report.

  • Net new Treasury supply for the July 31 settlement will be the heaviest it has been since July 15, 2011. The shift in sentiment on Friday suggests that it will be more of a problem for bonds than stocks.
  • After Tuesday, supply will be light until the end of August. The markets will not have to face that as an obstacle.
  • The 10 year Treasury Yield has been at a major inflection point as it set a minor new low at a key technical level. Friday’s action suggests a turn, but confirmation is needed.
  • Withholding tax collections reached a 4 week average real gain of 3.75% year to year, suggesting for a second week that economic data may come in better than consensus expectations for weak growth. That could be the Treasury bubble’s death star.
  • Withholding tax collections weakened over the past 10 days, but it looks like a normal fluctuation so far. If the 4 week average drops below a 2% real gain, that could be trouble.

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