The latest 30-year U.S. treasury bond auction has concluded, and it was a great success for the government and its insatiable thirst for borrowing. Demand was high, driving down the the yield to 4.268%, well below the expected range of 4.27-4.29%. Additionally, the bid to cover was, at 2.92, the highest since the 30 year was reintroduced in 2006.
All of this seems to conflict with the believed state of the economy. The stock markets are expected to recover, and in fact, have rebounded nicely off the lows and seem to be stabilized with moderate earnings growth forecasts for a limited but growing number of public companies. Gold bugs are betting on higher inflation and have backed those bets by driving the price of Au above $1000 per ounce. Existing home sales, while still a buyer's market, are bouncing back. The $USD is fairing poorly, and there is talk of creating a new global standard of monetization (ie. New Bretton Woods).
So, given all of that data, why were people gobbling up long-term Treasuries at discounted rates? Do they know something we don't, or are they just hedging their bets?
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