Treasury Market Soaring as Stocks Pullback

The damage in the stock market after last Friday's disappointing payroll number is actually not that bad - the Dow was down a little more than 150 points at last check. What might be more telling, however, is the activity in the government bond market where yields are getting pancaked at the long end of the curve amid heavy buying. All of the action is taking place in long dated Treasuries with yields actually rising at the short end of the yield curve. The 10-Year Note has seen extremely heavy buying with yields falling an incredible 26 basis points back to 2.03%. The 30-Year bond has seen its yield fall 29 basis points to 3.19%. The activity is reflected in the iShares Barclays 20+ Year Treasury Bond ETF

which has soared 2.37% to $115.59. While stocks are attempting to avoid a complete washout, the Treasury market is telling a different story - fear is back on Wall Street and big investors want out of risk assets. The VIX has surged nearly 12% and is trading at 18.68 at last check. If the buying in Treasuries is any indication, look for continued weakness throughout the day in stocks and don't be surprised if this move is the beginning of a much larger pullback in the major averages.