The trend for firm longer bonds and weak shorter debt will continue this month. Investors feel safer buying bonds on slumping stocks.

The slide in stocks is a positive for bonds. Further stocks declines will damp individuals' sentiment and could affect growth.

I don't think there are any investors who can say with confidence that 20-year bonds are a great buy with stocks rallying. It's natural to see some selling of bonds ahead of the auction.

Investors aren't going to chase 20-year bonds with yields under 2 percent. The market is facing selling pressure before the auction.

There's good demand among investors at five-year yields near 0.7 percent and 10-year yields near 1.4 percent. Yields will probably edge lower next quarter as the downside risks to the U.S. economy may materialize, threatening Japan's recovery.