Four days ago at 2:47 PM Eastern, the US Treasury held a routine 10-year bond auction that almost nobody noticed—but I was watching when it nearly failed with a 5.3 basis point tail, the lowest bid-to-cover ratio in eighteen months (2.24), and foreign bidders barely showing up while the Fed had to step in unofficially through primary dealers to prevent complete failure. Over the next 96 hours I watched something extraordinary unfold: Treasury yields spiked 18 basis points in one session, repo rates exploded from 5.32% to 5.89%, central banks held emergency weekend consultations, and three major foreign holders quietly signaled they’re reducing Treasury purchases—all while the Treasury announced they’re increasing auction sizes at exactly the moment demand is collapsing. A bond trader’s reaction when the results came in was one word: “Fuck”—and a New York Fed official told me off-record, “We knew demand was softening, but seeing it actually happen in an auction, seeing the data confirm what we feared, that’s real, and it’s accelerating faster than our models predicted.” This isn’t speculation about future collapse anymore—this is present-tense market stress requiring emergency Fed interventions, and the feedback loop has started: weak demand means higher yields, higher yields mean more expensive borrowing, more expensive borrowing means larger deficits, larger deficits mean more auctions into weakening demand. The next auction is Thursday—if that one also shows weakness, the pattern is confirmed and we’ve crossed from “crisis is coming” to “crisis is here,” and based on what I saw in those 96 hours, the timeline just compressed from 18 months to possibly 6 months or less.
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