Something is broken in the US bond market.
One day after the NY Fed unexpectedly announced yesterday's Agency MBS POMO was cancelled (then rescheduled to later in the day) due to "technical difficulties", moments ago the US Treasury announced that with 10 minutes to go before today's 7 Year auction, that the auction is being rescheduled for tomorrow due to, drumroll, "technical issues."
This is the full statement it said:
NEW CLOSING DATE AND TIMES FOR TODAY'S 7-YEAR NOTE AUCTION
The noncompetitive and competitive portion of the 7-year note auction originally scheduled to close today will now close Friday, February 26, 2016, at 11:00 a.m. and 11:30 a.m. ET, respectively. The close of the auction has been rescheduled due to a technical issue. The settlement date and all other aspects of the auction remain unchanged from the original announcement. Competitive and noncompetitive bids that have been submitted will still stand, but bidders may review and update bids until the auction closes.
Just what is going on behind the scenes in the US bond market for such dramatic events to take place within 24 hours of each other, only the Fed and Treasury know. Of course, they won't say and will merely chalk it down to "technical issues."
What is more stunning is that just like yesterday's POMO cancellation at 11:15am sent yields surging, so today's announcement has likewise pushed yields higher and stocks promptly followed.
Has the Fed/Treasury complex found a new way to manipulate markets: with the market delta hedging ahead of a POMO or auction, authorities yank the carpet from underneath everyone, and force a scramble to sell positions into the auction, pushing yields higher and unleashing a scramble into risk assets?
Keep an eye on the market: if stocks surge as a result of this unprecedented two-peat, we will have our answer.
And sure enough, the short-squeeze is unleashed...