Perhaps the greatest leaked secret of our investing lifetimes is that the Treasury bonds went into a price bubble. 24/7 Wall St. has been evaluating sectors to show the implied risks to investors what could happen if Treasury rates keep rising in yield. Now after strong economic forecasting showed that consumer confidence hit a 5-year high, we have already seen evidence that Treasury note auction investors may be backing away from bidding up Treasury prices and keeping yields lower and lower.

A new $35 billion 2-year Treasury Note auction went off worse than many investors might have hoped and was represented as the worst auction of this sort in over two years. The yield is still rather low at 0.283%, but the bid to cover ratio of 2.04 was only about 90% of its recent average. Is it fair to ask (or wonder) if this being the first day back from a 3-day weekend that usually marks the first of the summer vacations had something to do with this weak auction?

Indirect bidders were up slightly at 21.9%, but direct bidders coming in at 12.6% was only about half of the recent trends. Dealers took about 65% of the auction as the highest amount taken on by financial dealers in about four years.

It was just in recent days that Goldman Sachs predicted, ergo bet on, higher interest rates this year. We even saw one Treasury auction recently give a negative yield on TIPS for inflation protection.

Is this just the beginning? As long as another financial crisis from Europe or elsewhere does not interrupt the flow this time around, this could be just the beginning of the move toward investors demanding higher yields from Treasury notes and other fixed income investments.

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