The auction came in right at the market; there was moderate interest, nothing spectacular, but at 1.50 percent (50 basis points above the cost of carry) you can expect that.
A safety premium developed over the weekend with what we saw out of Israel and (Gaza) and what we didn't see coming out of Afghanistan and Pakistan.
There's a re-evaluation of the economic landscape that makes people willing to sell, but there's not a lot of people ready to buy right now.
After the stronger report on manufacturing from the New York Fed yesterday, it definitely reinforces the fact that the economy is doing better.
The chain stores sales data is coming in a little bit weak and oil prices are up. That's positive for the bond market, negative for the economy.
Today the flows have changed. We did see some selling this morning of the back end of the Treasury market and perhaps that's just a little disappointment that the stock market didn't go further below 10,000.
The risk at this point is that we get a weak payrolls number. If we get a negative number, that might inspire some pretty violent short-covering.
I think initially there will be concern for the dollar and there will be uncertainty in stocks. It will not be so bad for bonds . . . Bonds have sold off so much.
The volatility that we're seeing is ... (because) greater than 50 percent of the activity is program trading. The swings are really violent.
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