A 5 point down day doesn't even appear dramatic on the charts. Still, after a 13 point major breakout, the auction of new paper was a mess. A 10bp concession prior to the auction was met with weak demand and an 11bp tail. The Street got the supply on sale and Uncle Sam (the taxpayers) got ripped off. Meanwhile, the term structure formerly known as the "short end" squirmed, rolled over, stole the covers and went back to bed.
The discussion now revolves around the risks of pegging forward anchors and forcing participants into long securities. The concept of a Nominal GDP target will be a hot topic at Jackson Hole. When a global flight to quality centers on the Bond, you've got issues. Ironically, if you believe the Fed gambit could work (and 10 year supply can be extinguished thru their balance sheet) you are faced with a Hobson's choice. The Fed does not want to make good on Tuesday's promise. In a Leap of Faith far beyond my comprehension, someone paid 99.93+ for Fed Funds futures for next July (6.5bp implied).
Beyond the range insanity here and the flailing in Europe, a far more important metric continues to deteriorate. Population and demographic trends are no longer buttressing central bank and government policy meddling. This fundamental macro statistic will be a major problem in the post mega- credit cycle world. That equity was such a poor investment over the past decade should not be construed as a positive for the next, yet unnamed, cycle.