Bond market weakness returns on pause in rout, weak auction

With a pause in the Friday/Monday stock market rout, the bond market isn’t getting support from a flight to safety (at least for the moment) and worries specific to the bond market have remerged as the leading factor in bond yields.

Today the yield on the 10-year Treasury moved up 3 basis points, back above 2.80% to 2.83%, just about where it was before the flight to the safety of Treasuries sent yields back towards 2.70%. (A reminder that bond yields go up when bond prices fall.)

The pressure today was a weak auction of 10-year notes as part of heavy schedule of Treasury sales this week. That takes the rate back near the four-year high that prevailed before this market sell off.

Volume on U.S. stock exchanges exceeded 9 billion shares for the fourth straight day. Volume toped 9 billion shares on just one day prior to this “episode” in the last seven months.