As we pointed out last week, the broad flattening in the Treasury curve, and especially in the short-end continues, with the 2s5s just dropping to 97.6 bps earlier closing below the 104 support line on Friday. Why is this important? Because as Citi chief technical strategist Tom Fitzpatrick wrote in a note released to clients, this is a "concerning development" as it is one of those "other" metrics watched by the Fed in determining when "intervention" is required (not like Goldman's note from Friday had anything to do with it). He adds: "2/5 broke below this level first week of August last year, the result of increasing guidance that QE2 was on the way. Here we do not have any such guidance and instead the curve reflects increasing concerns with the U.S. economy/slowdown." We may add that since cause and effect do not really matter much, it is only a matter of time before the Fed assumes that the market is pricing in not economic weakness but precisely another QE event and reacts accordingly. Citi concludes: "2/5 decline may continue, and could be a negative augur for stock market." It will be... until the Fed proceeds to do what it does best: monetize. Which, assuming today's debt deal passes before midnight, it will just have gotten permission to do. To the tune of about ~$2.5 trillion.