Maybe some of the weakness in the treasuries can be tied to the muni market. Imagine all the money BB is going to have to print to save them. California and New Jersey are the worst and California just elected a pro big state government union man. The state unions say don't worry about are out of control benefits & wages since BB will create another bubble. During the meantime the Fed needs to subsidize California out of control spending.
Take a look at buying puts Franklin Res. (symbol BEN), one of the biggest fund companies pushing munis. I expect a pullback in BEN to $100 at least (now at $119 or so). Puts on BEN seems somehow appropriate since the other BEN is being criticized for QE2.
Investors sold off long-term municipal bonds in the past week, sending a shiver through a normally stable market.
On Friday, yields on consulting firm Municipal Market Advisors' index of AAA-rated 30-year municipals were up 15 basis points—or 0.15 percentage point—from the prior week. That is the sharpest move in 18 months, said Matt Fabian, managing director at the firm.
Analysts and investors attributed the decline in price, which moves opposite to yield, to a number of different factors. They include mounting fears about the stability of municipalities' finances, the fate of the Build America Bond program, and effects of the Federal Reserve's bond-buying efforts.