Chaotic Treasury selloff fueled by $50 billion position unwind

Bloomberg/Stephen Spratt/2-25-2021

USAGOLD note: This article offers important background on what is unfolding in the bond market. As mentioned in yesterday’s DMR, financial markets, in general, appear to be shrugging off Fed chairman Powell’s assurances of ultra-easy money and concentrating instead on aggressively rising bond yields. With bond yields moving sharply higher yesterday – the 10-year yield is now just under 1.5%, up .5% since early February – the markets will be looking to the Fed as the bond buyer of last resort. This article points to “record low demand” at a recent Treasury auction of 7-year bonds as triggering yesterday’s bond market sell-off. At the moment, it does not appear that Fed liquidity operations are keeping up with an onslaught of bond selling that is pushing yields aggressively higher. The markets, including gold and silver, are reacting accordingly.

Chart courtesy of TradingEconomics.com